On February 8, 2017, February 16, 2016 and February 17, 2015, the Company awarded its executive officers (in the aggregate) a target number of performance share units (“PSU’s”) equal to 57,110, 79,108 and 56,389 PSU’s, respectively. Each PSU represents a contingent right to receive one common share of the Company if vesting is satisfied at the end of a threeyear performance period (the “Performance Period”). The ultimate number of PSU’s that will vest and be earned, if any, after the completion of the Performance Period, is based on (1) (a) the Company’s cumulative pretax income from operations, excluding extraordinary items as defined in the underlying award agreements with the executive officers, over the Performance Period (weighted 80%) (the “Performance Condition”), and (b) the Company’s relative total shareholder return over the Performance Period compared to the total shareholder return of a peer group of other publiclytraded homebuilders (weighted 20%) (the “Market Condition”) and (2) the participant’s continued employment through the end of the Performance Period, except in the case of termination due to death, disability or retirement or involuntary termination without cause by the Company. The number of PSU’s that vest may increase by up to 50% from the target number based on levels of achievement of the above criteria as set forth in the applicable award agreements and decrease to zero if the Company fails to meet the minimum performance levels for both of the above criteria. If the Company achieves the minimum performance levels for both of the above criteria, 50% of the target number of PSU’s will vest and be earned. Any portion of PSU’s that does not vest at the end of the Performance Period will be forfeited. Additionally, the PSU’s have no dividend or voting rights during the Performance Period.

The grant date fair value of the portion of the PSU’s subject to the Performance Condition and the Market Condition component was\$23.34 and \$19.69, respectively, for the 2017 PSU’s \$16.85 and \$15.75, respectively, for the 2016 PSU’s and \$21.28 and \$18.92, respectively, for the 2015 PSU’s. In accordance with ASC 718, for the portion of the PSU’s subject to a Market Condition, stockbased compensation expense is derived using the Monte Carlo simulation methodology and is recognized ratably over the service period regardless of whether or not the attainment of the Market Condition is probable. Therefore, the Company recognized \$0.3 million in stockbased compensation expense during 2017 related to the Market Condition portion of the 2017, 2016 and 2015 PSU awards. There was a total of \$0.2 million of unrecognized stockbased compensation expense related to the Market Condition portion of the 2017 and 2016 PSU awards as of December 31, 2017. At December 31, 2017, the Market Condition for the 2015 PSU awards was met, and the company recorded \$0.2 million of stockbased compensation expense. Based on these results and board approval, 11,503 PSU’s vested during the first quarter of 2018 with respect to the portion of the 2015 PSU’s subject to the Market Condition.

For the portion of the PSU’s subject to a Performance Condition, we recognize stockbased compensation expense on a straightline basis over the Performance Period based on the probable outcome of the related Performance Condition. Otherwise, stockbased compensation expense recognition is deferred until probability is attained and a cumulative stockbased compensation expense adjustment is recorded and recognized ratably over the remaining service period. The Company reassesses the probability of the satisfaction of the Performance Condition on a quarterly basis, and stockbased compensation expense is adjusted based on the portion of the requisite service period that has passed. As of December 31, 2017, the Company had not recognized any stockbased compensation expense related to the Performance Condition portion of the 2017 PSU awards. If the Company achieves the minimum performance levels for the Performance Condition to be met for the 2017 awards, the Company would record unrecognized stockbased compensation expense of \$0.5 million as of December 31, 2017, for which \$0.2 million would be immediately recognized had attainment been probable at December 31, 2017. The Company recognized \$0.4 million of stockbased compensation expense related to the Performance Condition portion of the 2016 PSU awards during 2017 based on the probability of attaining the performance condition. The Company has \$0.2 million of unrecognized stockbased compensation expense for the 2016 PSU awards at December 31, 2017. The Company recognized \$1.1 million of stock-based compensation expense for the 2015 PSU awards as of December 31, 2017 which met the maximum performance level at December 31, 2017. Based on these results and board approval, 67,668 PSU’s vested during the first quarter of 2018 with respect to the portion of the 2015 PSU’s subject to the Performance Condition.

The purpose of the Company’s Amended and Restated Executives’ Deferred Compensation Plan (the “Executive Plan”), a nonqualified deferred compensation plan, is to provide an opportunity for certain eligible employees of the Company to defer a portion of their compensation and to invest in the Company’s common shares. The purpose of the Company’s Amended and Restated Director Deferred Compensation Plan (the “Director Plan”) is to provide its directors with an opportunity to defer their director compensation and to invest in the Company’s common shares.

Compensation expense deferred into the Executive Plan and the Director Plan (together the “Plans”) totaled \$0.4 million, \$0.1 million and \$0.3 million for the years ended December 31, 2017, 2016 and 2015. The portion of cash compensation deferred by employees and directors under the Plans is invested in fullyvested equity units in the Plans. One equity unit is the equivalent of one common share. Equity units and the related dividends will be converted and distributed to the employee or director in the

form of common shares at the earlier of his or her elected distribution date or termination of service as an employee or director of the Company. Distributions from the Plans totaled \$0.2 million during the years ended December 31, 2017 and 2016, and less than \$0.1 million during the year ended December 31, 2015. As of December 31, 2017, there were a total of 51,787 equity units with a value of\$1.2 million outstanding under the Plans. The aggregate fair market value of these units at December 31, 2017, based on the closing price of the underlying common shares, was approximately \$2.4 million, and the associated deferred tax benefit the Company would recognize if the outstanding units were distributed was \$1.3 million as of December 31, 2017. Common shares are issued from treasury shares upon distribution of equity units from the Plans.

The Company has a profitsharing and retirement plan that covers substantially all Company employees and permits participants to make contributions to the plan on a pretax basis in accordance with the provisions of Section 401(k) of the Internal Revenue Code of 1986, as amended. Company contributions to the plan are also made at the discretion of the Company’s board of directors based on the Company’s profitability and resulted in a \$1.8 million, \$1.4 million and \$1.2 million expense for the years ended December 31, 2017, 2016 and 2015, respectively.

There are three measurement input levels for determining fair value: Level 1, Level 2, and Level 3. Fair values determined by Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

To meet financing needs of our homebuying customers, M/I Financial is party to interest rate lock commitments (“IRLCs”), which are extended to customers who have applied for a mortgage loan and meet certain defined credit and underwriting criteria. These IRLCs are considered derivative financial instruments. M/I Financial manages interest rate risk related to its IRLCs and mortgage loans held for sale through the use of forward sales of mortgagebacked securities (“FMBSs”), the use of bestefforts whole loan delivery commitments, and the occasional purchase of options on FMBSs in accordance with Company policy. These FMBSs, options on FMBSs, and IRLCs covered by FMBSs are considered nondesignated derivatives. These amounts are either recorded in Other Assets or Other Liabilities on the Consolidated Balance Sheets (depending on the respective balance for that year ended December 31).

The Company measures both mortgage loans held for sale and IRLCs at fair value. Fair value measurement results in a better presentation of the changes in fair values of the loans and the derivative instruments used to economically hedge them.

In the normal course of business, our financial services segment enters into contractual commitments to extend credit to buyers of single-family homes with fixed expiration dates. The commitments become effective when the borrowers “lockin” a specified interest rate within established time frames. Market risk arises if interest rates move adversely between the time of the “lockin” of rates by the borrower and the sale date of the loan to an investor. To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, the Company enters into optional or mandatory delivery forward sale contracts to sell whole loans and mortgagebacked securities to broker/dealers. The forward sale contracts lock in an interest rate and price for the sale of loans similar to the specific rate lock commitments. The Company does not engage in speculative or trading derivative activities. Both the rate lock commitments to borrowers and the forward sale contracts to broker/dealers or investors are undesignated derivatives, and accordingly, are marked to fair value through earnings. Changes in fair value measurements are included in earnings in the accompanying Consolidated Statements of Income.

The fair value of mortgage loans held for sale is estimated based primarily on published prices for mortgagebacked securities with similar characteristics. To calculate the effects of interest rate movements, the Company utilizes applicable published mortgagebacked security prices, and multiplies the price movement between the rate lock date and the balance sheet date by the notional loan commitment amount. The Company sells loans on a servicing released or servicing retained basis, and receives servicing compensation. Thus, the value of the servicing rights included in the fair value measurement is based upon contractual terms with investors and depends on the loan type. The Company applies a fallout rate to IRLCs when measuring the fair value of rate lock commitments. Fallout is defined as locked loan commitments for which the Company does not close a mortgage loan and is based on management’s judgment and company experience.


The following table sets out the details of our current assets and liabilities as at the end of the financial years indicated.

	At 31 December	 At 31 May	At
30 September

2008	2009	2010	2011	2011

HK$’000	 HK$’000	 HK$’000	 HK$’000	 HK$’000

(audited)	 (audited)	 (audited)	 (audited)	 (unaudited)

Current assets

Loan receivables	156,381	118,795	123,074	130,194	138,137

Prepayments, deposits and other
receivables	394	851	4,197	4,296	4,664

Due from a related company	226	—
	—
	—
	—

Cash and cash equivalents	6,772	8,388	1,848	5,362	6,170

Tax receivable	—
	—
	932	1,316	293

Total current assets	163,773	128,034	130,051	141,168	149,264

Current liabilities

Account payables	76	56	—
	—
	—

Accruals and other payables	2,727	2,380	5,965	6,868	5,332

Interest-bearing loans	30,500	15,606	35,686	45,260	36,920

Tax payable	5,840	2,185	—
	—
	—

Total current liabilities	39,143	20,227	41,651	52,128	42,252

Net current assets	124,630	107,807	88,400	89,040	107,012

Net current assets remained stable as at 31 December 2009 at HK\$107.8 million compared with as at 31 December 2008. The amount of loan receivables had reduced by about 24% from HK\$156.4 million to HK\$118.8 million mainly due to the repayment of loans of an aggregate of HK\$22.8 million by a customer in September and November 2009 respectively and repayment of several fixed loans and mortgage loans during the year. As we had financed the loan to the aforesaid customer partly with short term borrowings, our Group had substantially repaid such short term borrowings after the customer’s repayment. As our equity capital increased with our profitability, we had progressively reduced our reliance on borrowings to fund our operations. Consequently, short term loans borrowed from Independent Third Party Lenders and Shareholders reduced substantially from HK\$30.5 million as at 31 December 2008 to nil as at 31 December 2009. Meanwhile, our Group obtained a mortgage loan in 2009 which amounted to approximately HK\$15.6 million as at 31 December 2009 in relation to the acquisition of office premises for own use and as investment properties.

Net current assets decreased by approximately 18.0% from HK\$107.8 million as at 31 December 2009 to HK\$88.4 million as at 31 December 2010 as we had drawn down two loans from Independent Third Party lenders which in aggregate amounted to HK\$20.0 million. Prepayments, deposits and other receivables increased from HK\$0.9 million as at 31 December 2009 to HK\$4.2 million as at 31 December 2010 mainly due to the prepayment

of listing expenses during the year. Accruals and other payables increased from HK\$2.4 million as at 31 December 2009 to HK\$6.0 million as at 31 December 2010 due mainly to accruals for expenses relating to the Listing. There was tax receivable amounting to about HK\$0.9 million due to refund of provisional tax previously paid which was higher than actual tax payable for the year ended 31 December 2010.

As a result of (i) our expansion of loan portfolio during the second half of 2010 where loan receivables increased from HK\$118.8 million as at 31 December 2009 to HK\$123.1 million as at 31 December 2010; and (ii) payment of the Pre-IPO Dividend in October 2010, our cash balance as at year-end decreased from approximately HK\$8.4 million as at 31 December 2009 to HK\$1.8 million as at 31 December 2010. To finance our loan portfolio expansion, we had also incurred the aforesaid HK\$20 million in additional borrowings.

Net current assets remained relatively stable at approximately HK\$89.0 million as at 31 May 2011. Our loan receivable balances increased from HK\$123.1 million as at 31 December 2010 to HK\$130.2 million as at 31 May 2011. Meanwhile, the interest-bearing loans balance increased from HK\$35.7 million as at 31 December 2010 to HK\$45.3 million as at 31 May 2011 as we obtained additional borrowings from Independent Third Party lenders during the period to finance our loan portfolio expansion. Our accruals and other payables increased from HK\$6.0 million to HK\$6.9 million due mainly to increased accruals for operating expenses. Our cash and cash equivalent balance increased to HK\$5.4 million as at 31 May 2011.

The following table sets out a summary of net cash flow for the financial years indicated.

	Year ended 31 December	Five months
ended 31 May

2008	2009	2010	2010	2011

HK$’000	 HK$’000	 HK$’000	 HK$’000	 HK$’000

Net cash (used in)/from operating activities	(61,401)	69,321	(15,100)	14,536	(5,453)

Net cash used in investing activities	(768)	(48,200)	(5,408)	(10,763)	166

Net cash from/(used in) financing activities	64,885	(19,505)	13,968	225	8,801

Net increase/(decrease) in cash and cash
equivalents	2,716	1,616	(6,540)	3,998	3,514

Cash and cash equivalents at beignning of
year/iperod	4,056	6,772	8,388	8,388	1,848

Cash and cash equivalents at end of
year/period	6,772	8,388	1,848	12,386	5,362


2．对所
有者
（或股
东）的
分配										-6,296,285.56		-6,296,285.56

3．其他

（四）
所有者
权益内
部结转

1．资本
公积转
增资本
（或股
本）

2．盈余
公积转
增资本
（或股
本）

3．盈余
公积弥
补亏损

4．设定
受益计
划变动
额结转
留存收
益

5．其他
综合收
益结转
留存收
益

6．其他

（五）
专项储
备

1．本期
提取


Figure 3. (Top) Evolution of the gravitational potential \( \Psi \) normalized by its initial value \( \Psi ^ { ( s ) } \) for the wavenumber \( k \) =0.01 \( \mathrm { M p c } ^ { - 1 } \). We show the evolution of \( \Psi / \Psi ^ { ( s ) } \) for four models listed in Table I and also for \( \Lambda ^ { \prime } \) CDM (black line). (Bottom) Percentage relative difference of \( \Psi \) relative to that in \( \Lambda ^ { \prime } \) CDM. The cosmological parameters used for this plot are the Planck 2015 best-fit values for \( \Lambda \) CDM [105] (which is also the case for plots in Figs. 5 and 6). The physical interpretation of this figure is discussed in Sec. IV.

\( \Lambda \) CDM at high redshifts (\( a \lesssim 1 0 ^ { - 2 } \)). This property arises from the dominance of \( x _ { 4 } \) over \( x _ { 1 , 2 , 3 } \) at early times, in which case the relative density abundances between dark energy and matter fluids are modified. Besides this effect, the non-negligible early-time contribution of \( x _ { 4 } \) to scalar perturbations gives rise to a scale-dependent evolution of gravitational potentials, which manifests itself in the k-dependent variation of \( \mu ( a , k ) \) and \( \Sigma ( a , k ) \). In Fig. 4, we plot the evolution of \( \Psi \) in BH1 for three different values of k. For perturbations on smaller scales, the deviation from \( \Lambda \) CDM tends to be more significant. In models BH2, BH3, and GGC, the early-time evolution of \( \Psi \) is similar to that in \( \Lambda ^ { \prime } \) CDM, but they exhibit large deviations from \( \Lambda \) CDM at late times.

At low redshifts, the lensing gravitational potential \( \phi _ { \mathrm { l e n } } = ( \Psi + \Phi ) / 2 \) evolves in a similar way to \( \Psi \), by re-flecting the property \( \mu \simeq \Sigma \) for \( x _ { A } ^ { ( 0 ) } \ll 1 \). The lensing angular power spectrum can be computed by using the line of sight integration method, with the convention [99]

where \( \mathcal { P } ( k ) = \Delta _ { \mathcal { R } } ^ { 2 } ( k ) \) is the primordial power spectrum of curvature perturbations, and \( j _ { \ell } \) is the spherical Bessel function. The source \( S _ { \phi } \) is expressed in terms of the transfer function

with \( T _ { \phi } ( k , \tau ) \, = \, k \phi _ { \mathrm { l e n } } \), \( \chi \) is the comoving distance with \( \chi _ { * } \) corresponding to that to the last scattering surface, \( \tau _ { 0 } \) is today’s conformal time \( \textstyle \tau = \int a ^ { - 1 } \mathrm { d } t \) satisfying the relation \( \chi = \tau _ { 0 } - \tau \) . In Fig. 5, we show the lensing power spectra \( \bar { D } _ { \ell } ^ { \phi \phi } = \ell ( \ell + 1 ) C _ { \ell } ^ { \bar { \phi } \phi } / ( 2 \pi ) \) and relative differences in units of the cosmic variance for four models listed in Table I. Since \( \Sigma _ { i } > \) 1 at low redshifts in BH and GGC models, this works to enhance \( D _ { \ell } ^ { \phi \phi } \) compared to \( \Lambda \) CDM. We note that the amplitude of matter density contrast \( \delta _ { m } \) in these models also gets larger than that in \( \Lambda \) CDM by reflecting the fact that \( \mu > \) 1. In Fig. 5, we observe

Figure 4. (Top) Evolution of the gravitational potential \( \Psi \) normalized by its initial value \( \Psi ^ { ( s ) } \) for BH1 and \( \Lambda ^ { \prime } \) CDM with three different wavenumbers: \( k \, = \, 0 . 0 1 , 0 . 1 , 0 . 5 \, \, \, \mathrm { M p c } ^ { - 1 } \). In Table I, we list the starting values of parameters \( x _ { i } \) at the initial redshift \( z _ { s } = 1 . 5 \times 1 0 ^ { 5 } \) for the BH1 model. (Bottom) Percentage relative difference of \( \Psi \) relative to that in \( \Lambda ^ { \prime } \) CDM for the same values of k in the top panel.

Figure 5. (Top) Lensing angular power spectra \( D _ { \ell } ^ { \phi \phi } ~ = ~ \)\( \ell ( \ell + 1 ) C _ { \ell } ^ { \phi \phi } / ( 2 \pi ) \) for \( \Lambda \) CDM and the models listed in Ta-ble I, where \( C _ { \ell } \) is defined by Eq. (4.7). (Bottom) Rela-tive difference of the lensing angular power spectra, com-puted with respect to \( \Lambda \) CDM, in units of the cosmic variance \( \bar { \sigma } _ { \ell } = \sqrt { 2 / ( 2 \ell + 1 ) } C _ { \ell } ^ { \Lambda \mathrm { C D M } } \).

Figure 6. (Top) Evolution of the time derivative \( \dot { \Psi } + \dot { \Phi } \) for \( \Lambda ^ { \prime } \) CDM and the models listed in Table I, computed at \( k \)=0.01 \( \mathrm { M p c } ^ { - 1 } \). (Bottom) Relative difference of \( \dot { \Psi } \! + \! \dot { \Phi } \), computed with respect to \( \Lambda ^ { \prime } \) CDM. See the discussion after Eq. (4.11) for the physical interpretation of this figure.

that, apart from BH1 in which \( \Sigma \) is close to 1, the lensing power spectra in other three cases are subject to the en-hancement with respect to \( \Lambda ^ { \prime } \) CDM. Since today’s values of \( \mu \) and \( \Sigma \) increase for larger \( x _ { 3 } ^ { ( 0 ) } \), the deviation from \( \Lambda \) CDM tends to be more significant with the order of GGC, BH2, and BH3.

Let us proceed to the discussion of the impact of BH and GGC models on the CMB temperature anisotropies. The CMB temperature-temperature (TT) angular spec-trum can be expressed as [100]

\[ C _ { \ell } ^ { \mathrm { T T } } = ( 4 \pi ) ^ { 2 } \int \frac { \mathrm { d } k } { k } \; \mathcal { P } ( k ) \Big | \Delta _ { \ell } ^ { \mathrm { T } } ( k ) \Big | ^ { 2 } \, , \qquad \mathrm { ( 4 . 9 ) } \]

with \( \tilde { \mu } \) being the angular separation, and \( S _ { \mathrm { T } } ( k , \tau ) \) is the radiation transfer function. The contribution to \( S _ { \mathrm { T } } ( k , \tau ) \) arising from the integrated-Sachs-Wolfe (ISW) effect is of the form

\[ S _ { \mathrm { T } } ( k , \tau ) \sim \left( \frac { \mathrm { d } \Psi } { \mathrm { d } \tau } + \frac { \mathrm { d } \Phi } { \mathrm { d } \tau } \right) e ^ { - \kappa } \, , \qquad \qquad ( 4 . 1 1 ) \]

where \( \kappa \) is the optical depth. Besides the early ISW effect which occurs during the transition from the radiation to matter eras by the time variation of \( \Psi + \Phi \), the pres-ence of dark energy induces the late-time ISW effect. In the \( \Lambda \) CDM model, the gravitational potential −(Ψ + Φ),which is positive, decreases by today with at least more than 30 % relative to its initial value (see Fig. 3). As we observe in Fig. 6 we have \( \dot { \Psi } + \dot { \Phi } > \) 0 in this case, so the ISW effect gives rise to the positive contribution to Eq. (4.9). In Fig. 7, we plot the CMB TT power spectra \( D _ { \rho } ^ { \mathrm { T T } } = \ell ( \ell + 1 ) C _ { \rho } ^ { \mathrm { T T } } / ( 2 \pi ) \) for the models listed in Table I and \( \Lambda \) CDM. In BH1 the parameter \( \Sigma \) is close to 1 at low redshifts due to the smallness of \( x _ { 3 } ^ { ( 0 ) } \), so the late-time ISW effect works in the similar way to the GR case. Hence the TT power spectrum in BH1 for the multipoles \( \ell \lesssim \) 30 is similar to that in \( \Lambda \) CDM.

In the GGC model of Fig. 7, we observe that the large-scale ISW tail is suppressed relative to that in \( \Lambda ^ { \prime } \) CDM. This reflects the fact that the larger deviation of \( \Sigma \) from 1 leads to the time derivative \( \dot { \Psi } + \dot { \Phi } \) closer to 0, see Fig. 6. Hence the late-time ISW effect is not significant, which results in the suppression of \( D _ { \ell } ^ { \mathrm { T T } } \) with respect to \( \Lambda \) CDM. In Ref. [72] this fact was first recognized in the GGC model, which exhibits a better fit to the Planck CMB data. As the deviation of \( \Sigma \) from 1 increases further, the sign of \( \dot { \Psi } + \dot { \Phi } \) changes to be negative (see Fig. 6). The BH2 model can be regarded as such a marginal case in which the large-scale ISW tail is nearly flat. In BH3, the increase of \( \Sigma \) at low redshifts is so significant that the largely negative ISW contribution to Eq. (4.9) leads to the enhanced low-\( \ell \) TT power spectrum relative to \( \Lambda \) CDM.

The modified evolution of the Hubble expansion rate from \( \Lambda \) CDM generally leads to the shift of CMB acoustic peaks at high-\( \ell \). In Fig. 8, we observe that the largest deviation of H(a) at high redshifts occurs for BH1 by the dominance of \( x _ { 4 } \) over \( _ { x _ { 1 , 2 , 3 } } \). This leads to the shift of acoustic peaks toward lower multipoles (see Fig. 7). We also find that BH3 is subject to non-negligible shifts of high-\( \ell \) peaks due to the large modification of H(a) at low redshifts, in which case the peaks shift toward higher multipoles. Moreover, there is the large enhancement of ISW tails for BH3, so it should be tightly constrained from the CMB data. We note that the shift of CMB acoustic peaks is further constrained by the datasets of BAO and SN Ia. For BH2 and GGC the changes of peak positions are small in comparion to BH1 and BH3, but still they are in the range testable by the CMB data. Moreover, the large-scale ISW tail is subject to the sup-pression relative to \( \Lambda \) CDM in BH2 and GGC.

In BH1, we also notice a change in the amplitude of acoustic peaks occurring dominantly at high \( \ell \). This is known to be present in models with early-time modifi-cations of gravity [101, 102]. The modification of gravi-tational potentials affects the evolution of radiation per-turbations (monopole and dipole) through the radiation driving effect [101, 103], thus resulting in the changes in amplitude and phase of acoustic peaks at high \( \ell \).

The modified time variations of \( \Psi \) and \( \Phi \) around the recombination epoch also give a contribution to the early ISW effect. This is important on scales around the first acoustic peak, corresponding to the wavenumber \( k \simeq \) 0.016 \( \mathrm { M p c ^ { - 1 } } \) for our choice of model parameters. To have a more qualitative feeling of this contribution, we have estimated the impact of the early ISW effect on \( D _ { \ell } ^ { \mathrm { T T } } \) by using the approximate ISW integral presented


In this prospectus, unless the context otherwise requires, the following expressions shall have the following meanings.

‘‘2016 Pre-IPO
Investment’’	the pre-IPO investment in Clarity Medical by Clear Lead comlpeted on
15 August 2016 as set out in the section headed ‘‘History,
Reorganisation and Corporate Structure—  Pre-IPO Investments’’ of
this prospectus

‘‘2018 Pre-IPO
Investment’’	the pre-IPO investment in Clarity Medical by WuXi ATppec comlpeted
on 8 Februar 2018y as set out in the section headed ‘‘History,
Reorganisation and Corporate Structure—  Pre-IPO Investments’’ of
this prospectus

‘‘2019 Pre-IPO
Investment’’	the pre-IPO investment in Clarity Medical by Mr. Wu comleted on 6
pMarch 2019 as set out in the section headed ‘‘History, Reorganisation
and Corporate Structure—  Pre-IPO Investments’’ of this prospectus

‘‘3W Partners’’	 3W Partners Fund I L.P., a Cayman Islands exempted limited
partnership established in January 2014 and managed by 3W Partners
GP Limited as its general partner

‘‘Accountant’s Report’’	 the accountant’s report set out in Appendix I to this prospectus

‘‘Articles of Association’’
or ‘‘Articles’’	the articles of association of our Company, adopted on 26 January
2022, which will become effective upon the Listing Date, and as
amended, sulppemented or otherwise modified from time to time

‘‘associate(s)’’	 has the meaning ascribed to it under the Listing Rules

‘‘Audit Committee’’	 the audit committee of the Board

‘‘Awareness Trust’’	 a discretionary trust established by Dr. Tse (as the settlor and the
protector), the discretionary beneficiaries of which include Dr. Tse and
his family members

‘‘Board’’ or ‘‘Board of
Directors’’	our board of Directors

‘‘Business Da’’y or
‘‘business da’’y	a day (other than a Saturday or a Sunday or a public holiday in Hong
Kong) on which banks in Hong Kong are open for normal banking
business

‘‘BVI’’	 British Virign Islands

‘‘CAGR’’	 compound annual growth rate, a measurement to assess the growth rate
of value over time

‘‘Caiptalisation Issue’’	 the issuance of new Shares to be made upon the caitalipsation of certain
sums standing to the credit of the share premium account of our
Company, as further described in the section headed ‘‘Statutory and
General Information—  A. Further Information about our Group—  4.
Resolutions passed by our Shareholders’’ in Appendix IV to this
prospectus

‘‘Cataract Surgeries
Programme’’	the programme funded by the Government to increase the cataract
surgeries throuhgput via a public-private partnership delivery model.
Under this programme, invited patients have the choice to receive
cataract surgery from private ohthalmoloigsts, with the help of a fixed
psubsidy

‘‘Cayman Islands
Companies Act’’,
‘‘Cayman Companies
Act’’ or ‘‘Companies
Act’’	the Companies Act Cap. 22 (Act 3 of 1961, as consolidated and revised)
of the Cayman Islands

‘‘CCASS’’	 the Central Clearing and Settlement System established and operated
by HKSCC

‘‘CCASS Clearing
Participant’’	a person admitted to participate in CCASS as a direct clearing
participant or a general clearing participant

‘‘CCASS Custodian
Participant’’	a person admitted to participate in CCASS as a custodian participant

‘‘CCASS EIPO’’	 the alifppcation or the Honfg Kong Ofer Shares to be issued in the
name of HKSCC Nominees and deposited directly into CCASS to be
credited to your or a designated CCASS Participant’s stock account
throuh causing HKSCC Nominees to albhppy on your ealf, inclguding
by (i) instructing your broker or custodian who is a CCASS Clearing
Participant or a CCASS Custodian Participant to igve electronic
alippcation instructions via CCASS terminals to alfhHppy or te ong
Konfffg Oer Shares on your behal, or (ii) if you are an existing CCASS
Investor Participant, igving electronic aliiippcaton instructons throuh
gthe CCASS Internet System (htt.ps://i.hhpccasscom) or throug te
CCASS Phone System (usi ng the procedures in HKSCC’s‘‘An
Operating Guide for Investor Participants’’ in effect from time to
time). HKSCC can also input electronic alippcation instructions for
CCASS Investor Participants throuh HKgSCC’s Customer Service
Centre by comlpeting an input request

‘‘CCASS Investor
Participant’’	a person admitted to participate in CCASS as an investor participant
who may be an individual, joint individuals or a corporation


Note—The distribution of our five visual ratings for the 3786 planets or planet candidates (based on the disposition in the NASA Exoplanet Cumulative Table on June 6, 2016) and all 5930 KOIs.

Table 3 shows that most ratings have a similar distribution, with 2-3% having a score of "9" (exceptional), 5% a score of "8" (strong), 15% a score of "7" (weak/possible), and the remaining ∼75% indicating very weak or indiscernible signals. Similar distributions are expected since each rating correlates strongly with the SNR of a TTV signal. The Periodicity ratings both show ∼1000 KOIs with a rating of "0" which resulted from long-period planets (or aliases) without enough TTVs to ascertain periodicity (too few “median squares”).

The Overall rating was the most important category, and will be considered in most detail below. A post facto assessment of the Overall ratings suggests that "9" corresponds to the Strongest TTV signals; an "8" corresponds to a Strong signal; a "7" corresponds to a weak, minimal, and/or noisy signal; and "6" or below indicate no TTV signal of interest. For example, the H+16 list of interesting signals contained practically all "9"s and most "8"s. Many of the planets with an Overall rating of 9 have been analyzed directly in various TTV studies.

Of particular interest is the 657 planets with an Overall rating of "7". More detailed and careful analyses of these systems should reveal large numbers of weak constraints on masses, densities, and/or the presence of non-transiting planets. Analyzing these as an ensemble could provide significant scientific insights, even though each individual measurement is weak.

Though EBs received the same treatment as the rest of the KOIs, they are not the focus of our study. We therefore removed these from Table 2 and discuss them here. Only known EBs are removed; it is likely that many additional unknown EBs remain and, indeed, our TTV plots can sometimes be used to help identify such false positives.

We gather some of the properties of these EBs from Villanova’s Kepler Eclipsing Binary Catalog7 on June 6, 2016. These are combined with our ratings in Table 4. These are provided as a basic reference; there are many other sources for determining EBs with interesting timing variations (e.g., Kirk et al. 2016).

The remaining discussions of TTV demographics use only systems identified as CANDIDATE or CONFIRMED in the Exoplanet Archive disposition as of June 6, 2016 (based mostly on DR24). We refer to these as “planets” throughout. Note that these dispositions sometimes exclude planets with very strong TTVs (see Appendix A, but this is a small effect that we neglect.


secondary school students OMO after-school education services which supplement their regular English, Chinese, Mathematics and other curriculum at school), in the PRC and any other country orj urisdiction to which our Group provides such services and/or in which any member of our Group carries on such business from time to time (the ‘‘Restricted Business’’). Such non-competition undertaking does not apply to:

(i) any interests in the shares of any member of our Group; or

(ii) interests in the shares of a company other than our Company whose shares are listed on a recognised stock exchange provided that:

(a) any Restricted Business conducted or engaged in by such company (and assets relating thereto) accounts for less than 10% of that company’s consolidated revenue or consolidated assets, as shown in that company’s latest audited accounts; or

(b) the total number of the shares held by the Covenantors and/or their respective close associates in aggregate is less than 5% of the issued shares of that class of the company in question and the Covenantors and/or their respective close associates are not entitled to appoint a majority of our directors of that company and at any time there should exist at least another shareholder of that company whose shareholdings in that company should be more than the total number of shares held by the Covenantors and their respective close associates in aggregate; or

(c) the Covenantors and/or their respective close associates do not have the control over the board of such company.

The Deed of Non-competition shall take effect upon Listing and shall expire on the earlier of:

(a) the day on which our Shares cease to be listed on the Stock Exchange or other recognised stock exchange; or

(b) the day on which the Covenantors and its/his close associates, individually or taken as a whole, cease to own, in aggregate, 30% or more of the then issued share capital of our Company directly or indirectly or cease to be deemed as controlling shareholder under the Listing Rules and do not have power to control our Board or there is at least one other independent Shareholder other than the Covenantors and its/his close associates holding more Shares than the Covenantors and its/his close associates taken together.

Pursuant to the Deed of Non-competition, each of the Covenantors has undertaken that if each of the Covenantors and/or any of its/his close associates is offered or becomes aware of any project or new business opportunity (‘‘New Business Opportunity’’) that relates to the Restricted Business, whether directly or indirectly, it/he shall (i) promptly within ten (10) Business Days notify our Company in writing of such opportunity and provide such information as is reasonably required by our Company in order to enable our Company to

come to an informed assessment of such New Business Opportunity; and (ii) use its/his best endeavours to procure that such opportunity is offered to our Company on terms no less favourable than the terms on which such New Business Opportunity is offered to its/his and/or its/his close associates.

All of our Directors (excluding those who is/are interested in the New Business Opportunity and has/have conflict of interests with our Company) will review the New Business Opportunity and decide whether to invest in the New Business Opportunity. If our Group has not given written notice of its desire to invest in such New Business Opportunity or has given written notice denying the New Business Opportunity within 30 Business Days (the ‘‘30-day Offering Period’’) of receipt of notice from the Covenantors, the Covenantors and/or its/his close associates shall be permitted to invest in or participate in the New Business Opportunity on its/his own accord. With respect to the 30-day Offering Period, our Directors consider that such period is adequate for our Company to assess any New Business Opportunity. In the event that our Company requires additional time to assess the new business opportunities, our Company may give a written notice to the Covenantors during the 30-day Offering Period and the Covenantors agree to extend the period to a maximum of 60 Business Days.

Our Controlling Shareholders and their respective close associates may not compete with us as provided in the Deed of Non-competition. Our Directors believe that there are adequate corporate governance measures in place to manage existing and potential conflicts of interest. In order to further avoid potential conflicts of interest, we have implemented the following measures:

(a) the Articles provide that a Director shall not be counted in the quorum or vote on any resolution of our Board approving any contract or arrangement or other proposal in which it/he/she or any of its/his/her close associates is materially interested unless in certain circumstances as expressly stated in the Articles;

(b) our independent non-executive Directors will review, on an annual basis, compliance with the Deed of Non-competition given by our Controlling Shareholders;

(c) our Company will obtain (i) an annual written confirmation in respect of our Controlling Shareholders’ compliance with the terms of the Deed of Non-competition, (ii) consent (from each of our Controlling Shareholders) to refer to the said confirmation in our annual reports, and (iii) all information as may reasonably be requested by us and/or our independent non-executive Directors for our review and enforcement of the Deed of Non-competition;

(d) our Company will disclose decisions on matters reviewed by our independent non-executive Directors relating to compliance and enforcement of the Deed of Non-competition of our Controlling Shareholders in the annual reports of our Company;


“Audit Committee”      :	the audit committee of the Company;

“Auditor”             :	PricewaterhouseCoopers, the external auditor of the Company;

“Board”                 :	the board of Directors of the Company;

“CG Code”            :	the Corporate Governance Code and Corporate Governance
Report as set out in Appendix 14 of the Listing Rules;

“Chi   na”   orth   e“PRC”:	th’e Peollpes Rebipuc of China;

“Company”,          :
“our Company”,
“the Company” or
“China Literature”	China Literature Limited（閱文集團）(formerly known as China
Reading Limited), an exempted company incorporated in the
Cayman Islands with limited liability on April 22, 2013 with
its Shares listed on the Main Board of the Stock Exchange on
the Listing Date under the stock code 772;

“COVID-19”           :	novel coronavirus (COVID-19), a coronavirus disease which
has its outbreak in the PRC and worldwide since around
January 2020;

“DAUs”              :	daily active users who access our lpatform throuhg our
products or our self-operated channels on Tencent products at
least once during the day in question;

“Director(s)”           :	the director(s) of our Company;

“Group”, “our Group”,    :
“the Group”, “we”,
“us”, or “our”	the Company, its subsidiaries and its consolidated affiliated
entities from time to time or, where the context so requires,
in respect of the period prior to our Company becoming the
holding company of its present subsidiaries, such subsidiaries as
if they were subsidiaries of our Company at the relevant time;

“HKD”              :	the lawful currency of Hong Kong;

“Hong Kong”           :	the Honig Kong Special Administrative Regon of the P’eolpes
ReliChpubc of ina;

“IP”                     :	intellectual property;

“Listing Date”          :	November 8, 2017, the date on which the Shares are listed
and on which dealings in the Shares are first permitted to take
lpace on the Stock Exchange;

“Listing Rules”          :	the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited, as amended, sulppemented
or otherwise modified from time to time;

“Main Board”        :	the stock exchange (excluding the option market) operated by
the Stock Exchange which is independent from and operates
in parallel with the Growth Enterprise Market of the Stock
Exchange;

“MAUs”           :	monthly active users who access our lpatform or throuhg our
lfproducts or our se-operated channels on Tencent products at
least once during the calendar month in question;

“Model Code”        :	the Model Code for Securities Transactions by Directors of
Listed Issuers;

“MPUs”           :	monthliy ipayng users, meannbg the numer of accounts that
purchase our content or virtual items on a special mobile app,
WAP or website at least once during the calendar month in
question;

“New Classics Media     :
 Holdings Limited
 (NCM)”	previously known as “Qiandao Lake Holdings Limited”, a
company established in Cayman Island on 18 May 2018.
Its subsidiaries are principally engaged in production and
distribution of television series and movies;

“Reporting Period”        :	the six months ended June 30, 2021;

“RMB”            :	the lawful currency of the PRC;

“RSU(s)”             :	restricted stock unit(s);

“SGD”               :	the lawful currency of Singapore;

“Shanhiga Yuewen”       :	Shanhiga Yuewen Information TechnoloC上g
y o., Ltd.（海閱文信息技術有限公司）, a company established in the PRC on
April 2, 2014;

“Share(s)”                  :	ordinary share(s) in the share caiptal of our Company with a
par value of USD0.0001 each;

“Shareholders”              :	holder(s) of our Share(s);


# Particulars of shareholdings of top ten holders of shares not subject to trading moratorium

Name of shareholder	Number of shares
held not subject to
trading moratorium	Class and number of shares

Class	Number

DonfElganCg ectric orporation	974016763,,	RMB denominated
ordinary shares	974016763,,

HKSCC Nominees Limited	338311619,,	Overseas listed foreign
shares	338311619,,

China Securities Finance Corporation Limited （中 國 證
券 金 融 股 份 有 限 公 司）	49648500,,	RMB denominated
ordinary shares	49648500,,

Central Huijin Asset Management Ltd. （中 央 匯 金 資 產
管 理 有 限 責 任 公 司）	22645600,,	RMB denominated
ordinary shares	22645600,,

Gao Dabing （高 大 兵）	15811422,,	RMB denominated
ordinary shares	15811422,,

China Construction Bank Corporation-Huaxia China
Securities Sichuan SOE Reform ETF Securities
Investment Fund (中 國 建 設 銀 行 股 份 有 限 公 司－
華夏中證四川國企改革交易型開放式指數證
券投資基金)	11723372,,	RMB denominated
ordinary shares	11723372,,

Ru Pengpeng (茹鵬鵬)	11334852,,	RMB denominated
ordinary shares	11334852,,

Huaxia Life Insurance Company Limited－Own funds
(華 夏 人 壽 保 險 股 份 有 限 公 司－自 有 資 金)	10073783,,	RMB denominated
ordinary shares	10073783,,

Agricultural Bank of China Limited – CSI 500 Index
ETF Securities Investment Fund （中 國 農 業 銀 行 股 份
有限公司－中證500交易型開放式指數證券投資基金）	9757259,,	RMB denominated
ordinary shares	9757259,,

Bosera Funds – Agricultural Bank – Bosera China
Securities and Financial Assets Management Program
（博時基金－農業銀行－博時中證金融資產管理計劃）	8480400,,	RMB denominated
ordinary shares	8480400,,

E Fund – Agricultural Bank – E Fund China Securities
and Financial Asset Management Program （易 方 達 基
金－農 業 銀 行－易 方 達 中 證 金 融 資 產 管 理 計 劃）	8480400,,	RMB denominated
ordinary shares	8480400,,

Name of shareholder	Number of shares
held not subject to
trading moratorium	Class and number of shares

Class	Number

Da Cheng Fund – Agricultural Bank – Da Cheng China
Securities and Financial Assets Management Program
（大成基金－農業銀行－大成中證金融資產管理計劃）	8480400,,	RMB denominated
ordinary shares	8480400,,

GF Fund – Agricultural Bank – GF China Securities and
Financial Assets Management Program （廣 發 基 金－
農 業 銀 行－廣 發 中 證 金 融 資 產 管 理 計 劃）	8480400,,	RMB denominated
ordinary shares	8480400,,

Zhong Ou Fund – Agricultural Bank – Zhong Ou China
Securities and Financial Assets Management Program
（中歐基金－農業銀行－中歐中證金融資產管理計劃）	8480400,,	RMB denominated
ordinary shares	8480400,,

China Southern Fund – Agricultural Bank – China
Southern China Securities and Financial Assets
Management Program （南 方 基 金－農 業 銀 行－南 方
中 證 金 融 資 產 管 理 計 劃）	8480400,,	RMB denominated
ordinary shares	8480400,,

Exlpanation on the connected relationship or concerted
actions among the aforesaid shareholders	The Company is not aware of any connected relationship or concerted
actions among the top ten shareholders and top ten holders of
tradable shares

Description of shareholders of preference shares with
restoration of voting rihts and their shareholdigngs	N/A


	Note	Capital
reserve	Goodwill on
consolidation	Exchange
reserve	Share-based
employee
compensation
reserve	Hedging
reserve	Miscellaneous
*reserves 	Retained
earnings	Total

US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000

As of 31 March 2020		17,338	(233,885)	78,241	11,411	24,434	(11,260)	1,930,426	1,816,705

Hedging instruments

– raw material commodity contracts

– fair value gains, net		–	–	–	–	92,988	 –	–	92,988

– transferred to inventory and
subsequently recognized in
the income statement	7(f)	–	–	–	–	(4,748)	 –	–	(4,748)

– deferred income tax effect		–	–	–	–	(14,560)	 –	–	(14,560)

– forward foreign currency exchange
contracts

– fair value gains, net		–	–	–	–	67,140	 –	–	67,140

– transferred to income statement		–	–	–	–	(30,227)	 –	–	(30,227)

– deferred income tax effect		–	–	–	–	(6,839)	 –	–	(6,839)

– net investment hedge

– fair value (losses), net		–	–	(28,250)	 –	–	 –	–	(28,250)

Defined benefit plans

– remeasurements	15	–	–	–	–	–	 –	11,296	11,296

– deferred income tax effect	17	–	–	–	–	–	 –	(1,555)	(1,555)

Long service payment

– remeasurements	15	–	–	–	–	–	 –	13	13

– deferred income tax effect	17	–	–	–	–	–	 –	(11)	(11)

Currency translations of subsidiaries		–	–	111,207	–	(211)	 –	–	110,996

Currency translations of associate		–	–	160	–	–	 –	–	160

Net comprehensive income recognized
directly in equity		–	–	83,117	–	103,543	 –	9,743	196,403

Profit for the year		–	–	–	–	–	 –	212,035	212,035

Total comprehensive income for the year		–	–	83,117	–	103,543	 –	221,778	408,438

Appropriation of retained earnings to
statutory reserve		–	–	–	–	–	1,867	(1,867)	 –

Incentive share schemes

– shares vested		–	–	–	(6,552)	 –	 –	–	(6,552)

– vested by cash settlement		–	–	–	(1,515)	 –	 –	–	(1,515)

– value of employee services		–	–	–	9,536	–	 –	–	9,536

FY20/21 interim dividend paid

– cash paid		–	–	–	–	–	 –	(17,034)	(17,034)

– shares issued in respect of
scrip dividend		–	–	–	–	–	 –	(2,760)	(2,760)

– scrip dividend for shares held for
the incentive share schemes		–	–	–	–	–	 –	236	236

		–	–	83,117	1,469	103,543	1,867	200,353	390,349

As of 31 March 2021		17,338	(233,885)	161,358	12,880	127,977	(9,393)	2,130,779	2,207,054

Final dividend proposed	27	–	–	–	–	–	 –	39,019	39,019

Others		17,338	(233,885)	161,358	12,880	127,977	(9,393)	2,091,760	2,168,035

As of 31 March 2021		17,338	(233,885)	161,358	12,880	127,977	(9,393)	2,130,779	2,207,054

\* Miscellaneous reserves mainly represent property revaluation reserve, statutory reserve and reserve arising from put option written to a non-controlling interest

	Note	Capital
reserve	Goodwill on
consolidation	Exchange
reserve	Share-based
employee
compensation
reserve	Hedging
reserve	Miscellaneous
*reserves 	Retained
earnings	Total

US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000

As of 31 March 2019		17,338	(233,885)	116,896	19,587	114,562	(9,984)	2,488,138	2,512,652

Hedging instruments

– raw material commodity contracts

– fair value (losses), net		–	–	–	–	(35,654)	 –	–	(35,654)

– transferred to inventory and
subsequently recognized in
the income statement	7(f)	–	–	–	–	(4,751)	 –	–	(4,751)

– deferred income tax effect		–	–	–	–	6,667	 –	–	6,667

– forward foreign currency exchange
contracts

– fair value (losses), net		–	–	–	–	(43,380)	 –	–	(43,380)

– transferred to income statement		–	–	–	–	(21,482)	 –	–	(21,482)

– deferred income tax effect		–	–	–	–	8,891	 –	–	8,891

– net investment hedge
– fair value gains, net		–	–	31,011	–	–	 –	–	31,011

Defined benefit plans

– remeasurements	15	–	–	–	–	–	 –	(7,483)	(7,483)

– deferred income tax effect	17	–	–	–	–	–	 –	(175)	(175)

Long service payment

– remeasurements	15	–	–	–	–	–	 –	(122)	(122)

– deferred income tax effect	17	–	–	–	–	–	 –	8	8

Currency translations of subsidiaries		–	–	(69,544)	 –	(419)	 –	–	(69,963)

Currency translations of associate		–	–	(122)	 –	–	 –	–	(122)

Net comprehensive (expenses) recognized
directly in equity		–	–	(38,655)	 –	(90,128)	 –	(7,772)	(136,555)

(Loss) for the year		–	–	–	–	–	 –	(493,657)	(493,657)

Total comprehensive (expenses) for the
year		–	–	(38,655)	 –	(90,128)	 –	(501,429)	(630,212)

Appropriation of retained earnings to
statutory reserve		–	–	–	–	–	(582)	582	–

Convertible bonds

– release of equity component upon
redemption / repurchase		–	–	–	–	–	(694)	500	(194)

Incentive share schemes

– shares vested		–	–	–	(11,222)	 –	 –	–	(11,222)

– vested by cash settlement		–	–	–	(2,427)	 –	 –	–	(2,427)

– value of employee services		–	–	–	5,473	–	 –	–	5,473

FY18/19 final dividend paid

– cash paid		–	–	–	–	–	 –	(13,565)	(13,565)

– shares issued in respect of scrip
dividend		–	–	–	–	–	 –	(24,797)	(24,797)

– scrip dividend for shares held for the
incentive share schemes		–	–	–	–	–	 –	374	374

FY19/20 interim dividend paid

– cash paid		–	–	–	–	–	 –	(12,084)	(12,084)

– shares issued in respect of scrip
dividend		–	–	–	–	–	 –	(7,495)	(7,495)

– scrip dividend for shares held for the
incentive share schemes		–	–	–	–	–	 –	202	202

		–	–	(38,655)	(8,176)	(90,128)	(1,276)	(557,712)	(695,947)

As of 31 March 2020		17,338	(233,885)	78,241	11,411	24,434	(11,260)	1,930,426	1,816,705

Final dividend proposed	27	–	–	–	–	–	 –	–	–

Others		17,338	(233,885)	78,241	11,411	24,434	(11,260)	1,930,426	1,816,705

As of 31 March 2020		17,338	(233,885)	78,241	11,411	24,434	(11,260)	1,930,426	1,816,705

\* Miscellaneous reserves mainly represent property revaluation reserve, equity component of convertible bonds (net of tax), statutory reserve and reserve arising from put option written to a non-controlling interest


The Unifiedcomms customer base has traditionally been concentrated in the SEA region. This has not changed in 2015, with Unifiedcomms SEA region revenues continuing to account for above 80% of the total revenue achieved for the year.

Unifiedcomms Revenue by Geographical Regions (S\$000)

Our GlobeOSS business experienced a decline in both system sale and managed service contract revenues in 2015 after the significant increase in system sales enjoyed in 2014. System sales decreased to S\$3.6 million in 2015, while managed service revenue also declined by S\$0.3 million to S\$1.9 million.

GlobeOSS Revenue by Type of Contract (S\$000)

GlobeOSS continues to have both its system sale and managed service business concentrated in the SEA region. The S\$1.6 million decline in revenue from the SEA region is mirrored by the combination of a S\$1.3 million drop in system sales and a S\$0.3 million drop in managed service revenues between 2014 and 2015.

GlobeOSS Revenue by Geographical Regions (S\$000)

# Group-wide system sale revenue decline

The decline in Group revenue this year against last year was mainly attributable to the 19% or S\$1.4 million decline in GlobeOSS system sale contract revenues, and a decline of S\$0.8 million in the managed service contract revenues across both Unifiedcomms and GlobeOSS businesses.

We expected 2015 to continue to be a challenging year for our businesses on the system sale front. The region that proved most disappointing was SEA, which had its contribution fall from S\$18.3 million to S\$16.9 million. The MEA region’s contribution to the total Group revenue also declined in 2015 to S\$1.4 million from S\$2.1 million the year before. The SA region remained disappointing, due yet again to the underperformance of certain managed service contracts.

In 2015, SEA, our Group’s home region, continues to be the largest geographic source of revenue, accounting for 87.8% of Group revenue.

# Higher gross profit achieved, despite having lower revenue

Although Group revenue was lower in 2015, gross profit achieved for the year was higher compared to 2014. Group gross profit for 2015 was S\$11.7 million, up by S\$0.8 million or 7.2% against 2014. The higher gross profit was mainly due to higher overall gross profit margin earned on Group revenue of

61.0% as compared to 50.9% recorded the year before. Average gross profit margin on system sale revenues improved to 60.4% in 2015, primarily due to lower third-party component cost incurred at both GlobeOSS and Unifiedcomms. Gross profit margin earned on managed service contract revenues also improved from 56.8% in 2014 to 61.2% this year. This improvement was primarily due to lower amortisation of intellectual property in 2015.

Gross Profit Margin by Type of Contract (S\$000)

Gross Profit Margin by Type of Contract (%)

The sales mix of our Group continues to exceed our target of having greater than fifty percent of Group revenue being derived from managed service contracts. This year managed service contract revenues accounted for 68.7% of Group revenue, up from 65.4% in 2014.

# Lower total opex this year, before and after exceptional items

Our Group’s operating expenditure for the year decreased to S\$8.4 million as compared to S\$9.0 million in 2014. In 2014 we had a foreign exchange gain due to the strengthening of the Pakistan Rupee and US Dollar against the Singapore Dollar and a provision that was made for the impairment of intellectual property that had been assessed as being no longer able to generate previously expected future cash flows.

This year, we had a higher foreign exchange gain due to the strengthening of the US Dollar against the Singapore Dollar and an impairment loss on plant and equipment - that was lower against 2014’s impairment loss on intellectual property assets - to take into our income statement. The impairment this year relates to a managed service contract that has been assessed as being no longer able to generate previously expected income and returns.

Excluding the efect of exceptional items such as the impairment loss this year, our opex for 2015 was S\$0.4 million lower at S\$8.2 million compared to S\$8.6 million for 2014. This decrease was due to a reduction in the technical, and sales and business development headcount of the Group.

Operating Expenditure before Exceptional Items (S\$000)

# Improved bottom line – a further year of improvement in our underlying business

2015 marks our eighth consecutive year of being in the black. Group net profit for the year, at S\$3 million, is 33.1% higher than the S\$2.3 million achieved in 2014. The double-digit growth of our Group’s bottom line reflected the improvement in the performance of our underlying businesses.

When the bottom line numbers are examined more closely, to exclude exceptional gains such as the fair value gains enjoyed on the acquisition of Ahead Mobile Sdn Bhd (‘AMSB’) across 2012 and 2013, the improvement in profit performance of our underlying businesses is more pronounced. The ‘adjusted’ net profit generated by our businesses grew more than seven-fold, from S\$0.4 million in 2013 to S\$3 million this year.


	Notes	Year ended 31 March	Five months ended
31 August

2015	2016	2017	2016	2017

HK$’000	 HK$’000	 HK$’000	 HK$’000	 HK$’000

			(Unaudited)

CASH FLOWS FROM
OPERATING ACTIVITIES

Profit/(loss) before tax		28,148	27,004	35,572	6,362	(5,195)

Adjustments for:

Finance cost	6	63	2	1	 –	18

Depreciation	7	4,078	8,858	9,456	4,473	3,632

Loss/(gain) on disposal/
write-off of items of
property, lpant and
equipment	7	(26)	 –	(75)	 –	543

Impairment of an other
receivable	7	178	 −	 −	 –	 –

Reversal of write-down of
inventories to net
realisable value	7	(175)	(63)	(169)	 –	 –

Write-down of inventories
to net realisable value	7	126	505	292	321	47

Provisions for reinstatement
costs – reversal of
unutilised provisions/
decrease in estimated
provisions	5	–	 –	(3,574)	(383)	 –

		32,392	36,306	41,503	10,773	(955)

Decrease/(increase) in
inventories		(97)	3,211	(2,072)	(6,255)	(13,330)

Decrease/(increase) in trade
receivables		1,972	240	(908)	(1,706)	(630)

Decrease/(increase) in
prepayments, deposits and
other receivables		(89)	(2,572)	(6,283)	45	(5,169)

Increase/(decrease) in trade
and bills payables		(484)	(5,145)	1,676	392	3,931

Increase/(decrease) in other
payables and accruals		5,640	(3,622)	(102)	10,511	25,698

Decrease in provisions		(932)	(50)	(47)	(47)	(2,000)

Cash generated from
operations		38,402	28,368	33,767	13,713	7,545

Hong Kong profits tax paid		(2,096)	(6,764)	(4,866)	 –	 –

Net cash flows from operating
activities		36,306	21,604	28,901	13,713	7,545

	Notes	Year ended 31 March	Five months ended
31 August

2015	2016	2017	2016	2017

HK$’000	 HK$’000	 HK$’000	 HK$’000	 HK$’000

			(Unaudited)

CASH FLOWS FROM
INVESTING ACTIVITIES

Purchases of items of
prol
pertdy, pant aneiqupment		(5,517)	(12,535)	(2,635)	(1,492)	(6,610)

Proceeds from disposal of
items of property, lpant and
equipment		26	 −	118	 –	 –

Acquisition of a business	24	(2,532)	(300)	 –	 –	 –

Net cash flows used in
investing activities		(8,023)	(12,835)	(2,517)	(1,492)	(6,610)

CASH FLOWS FROM
FINANCING ACTIVITIES

Interest paid		(63)	(2)	(1)	 –	(18)

Dividends paid		(33,000)	 –	 −	 –	 –

Net increase/(decrease) in
trust receipt loans		(3,695)	 –	 –	957	12,526

Net cash flows from/(used in)
financing activities		(36,758)	(2)	(1)	957	12,508

NET INCREASE/
(DECREASE) IN CASH
AND CASH
EQUIVALENTS		(8,475)	8,767	26,383	13,178	13,443

Cash and cash equivalents at
beignning of year/iperod		13,143	4,668	13,435	13,435	39,818

CASH AND CASH
EQUIVALENTS AT END
OF YEAR/PERIOD		4,668	13,435	39,818	26,613	53,261

ANALYSIS OF BALANCE
OF CASH AND CASH
EQUIVALENTS

Cash and bank balances		4,668	13,435	39,818	26,613	53,261


	附註
Notes	2020年
2020	2019年
2019

人民幣千元
RMB’000	人民幣千元
RMB’000

經營活動所得現金流量     CASH FLOWS FROM OPERATING
 ACTIVITIES

除稅前溢利           Profit before tax		1,329,129	1,226,809

調整：             Adjustments for:

利息收入           Interest income	5	(5,208)	(7,883)

向一家合資企業貸款的     Interest income of a loan to a joint
   利息收入          venture	5	(16,653)	(13,587)

物業、廠房及設備折舊     Depreciation of property, plant and
   equipment	6	8,307	4,848

使用權資產折舊        Depreciation of right-of-use assets	6	5,913	7,073

無形資產攤銷         Amortisation of intangible assets	6	2,930	1,390

購股權開支          Share option expense	6	33,774	46,519

投資物業公平值收益，淨額 Fair value gains on investment
     properties, net	14	(41,559)	(11,027)

按公平值計入損益之      Fair value gains on financial assets at
   金融資產之公平值收益   fair value through profit or loss	5	(71,086)	–

出售物業、廠房及設備     Gain on disposal of items of property,
   項目之收益           plant and equipment	6	(91)	–

分佔一家合資企業       Share of (profit)/loss of a joint venture
 （溢利）╱虧損		(196,103)	14,468

財務成本           Finance costs	7	135,554	82,421

		1,184,907	1,351,031

收購持作開發以供出售的土地 Acquisition of land held for development
 for sale		(613,062)	(269,860)

在建物業增加          Increase in properties under
 development		(1,324,638)	(1,865,961)

持作出售的已竣工物業減少   Decrease in completed properties held
 for sale		3,294,336	1,893,756

貿易應收賬款減少╱（增加）   Decrease/(increase) in trade receivables		58,664	(109,438)

預付款項、其他應收款項及  Increase in prepayments, other
其他資產增加         receivables and other assets		(248,030)	(103,143)

貿易應付賬款增加        Increase in trade payables		77,478	664,922

合約負債（減少）╱增加     (Decrease)/increase in contract liabilities		(2,268,422)	75,789

其他應付款項、已收按金及  Increase/(decrease) in other payables,
應計費用增加╱（減少）    deposits received and accruals		165,121	(378,473)

經營產生現金          Cash generated from operations		326,354	1,258,623

	附註
Notes	2020年
2020	2019年
2019

人民幣千元
RMB’000	人民幣千元
RMB’000

經營活動所得現金流量（續）   CASH FLOWS FROM OPERATING
 ACTIVITIES (Continued)

經營產生現金          Cash generated from operations		326,354	1,258,623

已收利息            Interest received		5,208	7,883

已付利息             Interest paid		(135,223)	(277,982)

已付中國企業所得稅       PRC corporate income tax paid		(150,546)	(57,322)

已付中國土地增值稅      PRC land appreciation tax paid		(245,288)	(125,065)

經營活動（所用）╱所得現金流量Net cash flows (used in)/from operating
淨額              activities		(199,495)	806,137

投資活動所得現金流量     CASH FLOWS FROM INVESTING
 ACTIVITIES

來自一家合資企業的      Settlement from/(advance to) a joint
結算╱向其墊款       venture		250,681	(6,668)

應收關聯方款項增加       Increase in amounts due from related
 parties		–	(392,700)

應收董事款項減少        Decrease in amounts due from directors		–	83,591

購買物業、廠房及設備項目   Purchases of items of property, plant
 and equipment	13	(56,869)	(4,025)

添置無形資產          Additions of intangible assets	16	(5,088)	(2,306)

添置投資物業          Additions of investment properties	14	(146,302)	(59,573)

購買按公平值計入損益之    Purchases of financial assets at fair value
金融資產           through profit or loss		(423,752)	–

收購附屬公司          Acquisitions of subsidiaries	37	72,292	–

出售物業、廠房及設備項目的Proceeds from disposal of items of
所得款項           property, plant and equipment		1,441	1,596

受限制現金（增加）╱減少    (Increase)/decrease in restricted cash		(110,551)	9,465

投資活動所用現金流量淨額   Net cash flows used in investing
 activities		(418,148)	(370,620)


# 1. CORPORATE AND GROUP INFORMATION (continued)

# Information about subsidiaries (continued)

# Particulars of the Company’s principal subsidiaries are as follows: (continued)

1. 公司及集團資料（續）

有關附屬公司的資料（續）

本公司主要附屬公司的詳情如下：（續）

Company name
公司名稱	Place and date
of incorporation/
registration and
place of operations
註冊成立╱註冊地點及
日期及營業地點	Nominal value
of issued and
paid-up share/
registered capital
已發行及繳足
股份面值╱註冊資本	Percentage of
equity attributable
to the Company
本公司
應佔權益百分比	Principal activities
主要活動

			Direct
直接	Indirect
間接

			%	%

Shenzhen Maoye Oriental Times Department Store
Co., Ltd.
�圳���東��代百����司**	PRC/Mainland China
8 August 2005
中國╱中國大陸
2005年8月8日	RMB1,200,000
人民幣1,200,000元	–	82.8	Operation of a department
store
經營百貨店

Zhuhai City Maoye Department Store Co., Ltd.
珠����百����司**	PRC/Mainland China
24 August 2001
中國╱中國大陸
2001年8月24日	RMB4,800,000
人民幣4,800,000元	–	82.8	Operation of a department
store
經營百貨店

Chongqing Maoye Department Store Co., Ltd.
重���百����司**	PRC/Mainland China
27 August 2004
中國╱中國大陸
2004年8月27日	RMB30,000,000
人民幣30,000,000元	–	82.8	Operation of a department
store
經營百貨店

Taiyuan Maoye Department Store Co., Ltd.
����百����司**	PRC/Mainland China
11 April 2008
中國╱中國大陸
2008年4月11日	RMB1,005,000,000
人民幣1,005,000,000元	–	100	Operation of a department
store
經營百貨店

Chongqing Baifule Business and
Commerce Co., Ltd.
重�百�樂�����司**	PRC/Mainland China
16 September 2008
中國╱中國大陸
2008年9月16日	RMB102,481,500
人民幣102,481,500元	–	82.8	Operation of a supermarket
經營超市

Shanxi Maoye Land and Real Estate
Development Co., Ltd. (“Sh”anxi Real Estate)
�⻄�������開����司
（「�⻄���」）**	PRC/Mainland China
18 November 2008
中國╱中國大陸
2008年11月18日	RMB100,000,000
人民幣100,000,000元	–	100	Property development
房地產發展

1. 公司及集團資料（續）

有關附屬公司的資料（續）

本公司主要附屬公司的詳情如下：（續）

Company name
公司名稱	Place and date
of incorporation/
registration and
place of operations
註冊成立╱註冊地點及
日期及營業地點	Nominal value
of issued and
paid-up share/
registered capital
已發行及繳足
股份面值╱註冊資本	Percentage of
equity attributable
to the Company
本公司
應佔權益百分比	Principal activities
主要活動

			Direct
直接	Indirect
間接

			%	%

Changzhou Maoye Department Store Co., Ltd.
常���百����司**	PRC/Mainland China
21 May 2009
中國╱中國大陸
2009年5月21日	RMB5,000,000
人民幣5,000,000元	–	100	Operation of a department
store
經營百貨店

Shenzhen Maolehui-commmerce Co., Ltd.
�圳�樂惠���務��責��司**	PRC/Mainland China
26 July 2019
中國╱中國大陸
2019年7月26日	RMB5,000,000
人民幣5,000,000元	–	98	Operation of a department
store
經營百貨店

Shenyang Maoye Times Property Co., Ltd.
�陽���代�����司**	PRC/Mainland China
24 September 2007
中國╱中國大陸
2007年9月24日	RMB8,000,000
人民幣8,000,000元	–	100	Property development
房地產發展

Shenzhen Municipal Maoye
Advertisement Co., Ltd.
�圳����告���司**	PRC/Mainland China
25 December 2002
中國╱中國大陸
2002年12月25日	RMB2,000,000
人民幣2,000,000元	–	100	Provision of advertising
services
提供廣告服務

Taizhou First Department Store Co., Ltd.
���一百��������司**	PRC/Mainland China
20 May 1994
中國╱中國大陸
1994年5月20日	RMB18,950,000
人民幣18,950,000元	–	80.57	Operation of a department
store
經營百貨店


Particulars of the Company’s subsidiaries are as follows:

本公司附屬公司的詳情如下：

Name of subsidiaries
附屬公司名稱	Place of
incorporation/
establishment
註冊成立╱
設立地點	Place of
operation
 營運地點	Issued and fully
paid share capital/
registered capital
已發行及繳足
股本╱註冊資本	Kind of
legal entity
 法人實體類型	Percentage of equity
interest/voting power
attributable to the Company
本公司應佔股權╱投票權百分比	 Principal activities
 主要業務

					Direct
直接	Indirect
間接

					2020
2020年	2019
2019年	2020
2020年	2019
2019年

Windrider Technology Company
Limited	The BVI
英屬處女群島	Hong Kong
香港	Ordinary shares
US$100
普通股100美元	Company with limited
liability
有限公司	100%	100%	–	–	 Investment holding
投資控股

Techwide Management Company
Limited	The BVI
英屬處女群島	Hong Kong
香港	Ordinary shares
US$100
普通股100美元	Company with limited
liability
有限公司	–	–	100%	100%	 Investment holding
投資控股

Wai Chi Electronic Technology
Management Company Limited
偉志電子科技管理有限公司	Hong Kong
香港	Hong Kong
香港	Ordinary shares
HK$100,000
普通股100,000港元	Company with limited
liability
有限公司	–	–	100%	100%	 Investment holding
投資控股

Ecosquare Energy Company
Limited	The BVI
英屬處女群島	Hong Kong
香港	Ordinary shares
US$100
普通股100美元	Company with limited
liability
有限公司	–	–	100%	100%	 Investment holding
投資控股

Wai Chi Energy Services
Company Limited
偉志節能服務有限公司	Hong Kong
香港	Hong Kong
香港	Ordinary shares
HK$100,000
普通股100,000港元	Company with limited
liability
有限公司	–	–	100%	100%	 Investment holding
投資控股

Aled Solution Company Limited	 The BVI
英屬處女群島	Hong Kong
香港	Ordinary shares
US$100
普通股100美元	Company with limited
liability
有限公司	–	–	100%	100%	 Investment holding
投資控股

Wai Chi Group (HK) Limited
偉志集團有限公司	Hong Kong
香港	Hong Kong
香港	Ordinary shares
HK$135,100,000
普通股
135,100,000港元	Company with limited
liability
有限公司	–	–	100%	100%	 Investment holding
投資控股

Name of subsidiaries
附屬公司名稱	Place of
incorporation/
establishment
註冊成立╱
設立地點	Place of
operation
 營運地點	Issued and fully
paid share capital/
registered capital
已發行及繳足
股本╱註冊資本	Kind of
legal entity
 法人實體類型	Percentage of equity
interest/voting power
attributable to the Company
本公司應佔股權╱投票權百分比	 Principal activities
 主要業務

					Direct
直接	Indirect
間接

					2020
2020年	2019
2019年	2020
2020年	2019
2019年

Wai Chi Opto Technology Limited
偉志光電有限公司	The PRC
中國	The PRC
中國	Ordinary shares
HK$62,380,000
普通股
62,380,000港元	Company with limited
liability
有限公司	–	–	100%	100%	 Trading of LED
backlight and
lighting products
and semiconductor
memory chips
買賣LED背光、
照明產品及半導
體存儲芯片

Wai Chi Opto Technology
(Shenzhen) Limited* (Note a)
偉志光電（深圳）有限公司
（附註a）	The PRC
中國	The PRC
中國	Registered capital
RMB97,128,000
註冊資本
人民幣97,128,000元	Company with limited
liability
有限公司	–	–	100%	100%	 Manufacture and sale
of LED backlight
and lighting
products and
sourcing business
製造及銷售LED背光
及照明產品及採
購業務

Sanxia Wai Chi Opto Technology
(Yichang) Limited* (Note b)
三峽偉志光電（宜昌）有限公司
（附註b）	The PRC
中國	The PRC
中國	Registered capital
RMB30,000,000
註冊資本
人民幣30,000,000元	Company with limited
liability
有限公司	–	–	100%	100%	 Manufacture and sale
of LED lighting
products and
provision of LED
light instalation
service
製造及銷售LED照明
產品及提供LED照
明安裝服務


FIG. 3: One-loop level Feynman diagrams inducing the \( Z Z ^ { \ast } \gamma \)(\( V = \gamma \)) coupling.

which is necessary to obtain nonzero results and is consistent with the Lorentz structure of the Lagrangian. We also have introduced the shorthand notation \( B _ { a b } ( c ^ { 2 } ) \, = \, B _ { 0 } ( c ^ { 2 } , m _ { a } ^ { 2 } , m _ { b } ^ { 2 } ) \), \( C _ { a b c } ( p _ { 2 } ^ { 2 } ) \, = \, C _ { 0 } ( m _ { Z } ^ { 2 } , 0 , p _ { 2 } ^ { 2 } , m _ { a } ^ { 2 } , m _ { b } ^ { 2 } , m _ { c } ^ { 2 } ) \) and \( C _ { a b c } ( q ^ { 2 } ) \, = \, C _ { 0 } ( m _ { Z } ^ { 2 } , m _ { Z } ^ { 2 } , q ^ { 2 } , m _ { a } ^ { 2 } , m _ { b } ^ { 2 } , m _ { c } ^ { 2 } ) \), where \( B _ { 0 } \) and \( C _ { 0 } \) stand for Passarino-Veltman scalar functions. From the above expressions, it is evident that the form factors vanish when the masses of the charged scalar bosons are degenerate. It is also straightforward to show that ultraviolet divergences cancel out.

The Feynman diagrams for the \( Z _ { \alpha } ( p _ { 1 } ) Z _ { \beta } ( p _ { 2 } ) \gamma _ { \mu } ^ { * } ( q ) \) couplings are similar to those inducing the \( Z Z ^ { * } \gamma \) coupling, but in this case the photon is off-shell. The corresponding form factor is given by:

where q is the photon four-momentum. As expected, this form factor is proportional to \( \mathrm { I m } ( g _ { i j } ^ { Z } g _ { j i } ^ { Z ^ { * } } ) \) and vanishes when \( m _ { i } = m _ { j } \) .

Because of Bose symmetry, in the case of the \( Z Z Z ^ { * } \) coupling, there are several more diagrams than those inducing the \( Z Z ^ { \ast } \gamma \) vertex. We present in Figure 4 the generic Feynman diagrams from which all diagrams inducing the

FIG. 4: Generic one-loop Feynman diagrams for the \( Z Z Z ^ { * } \) coupling. The complete set of diagrams is obtained by permuting \( Z _ { \alpha } ( p _ { 1 } ) \) and \( Z _ { \beta } ( p _ { 2 } ) \) and exchanging the charged scalars bosons.

\( Z Z Z ^ { * } \) vertex can be generated. Notice that diagrams (2) and (3) are obtained from diagram (1) after performing the permutations \( Z _ { \alpha } ( p _ { 1 } ) \leftrightarrow Z _ { \mu } ( q ) \), and \( Z _ { \beta } ( p _ { 2 } ) \leftrightarrow Z _ { \mu } ( q ) \), respectively. Additional diagrams are obtained from these diagrams following a similar procedure as that described in Fig. 3: for each one of the Feynman diagrams of Fig. 4 there are three more diagrams that are obtained similarly as diagrams (b)-(d) of Fig. 3, which are obtained from diagram (a) by permuting the Z gauge bosons and exchanging the charged scalars. Therefore, there are a total of twelve Feynman diagrams for the \( Z Z Z ^ { * } \) coupling. By using the appropriate simplifications, the amplitude of each diagram of Figure 4 reduces to those of the \( Z Z ^ { \ast } \gamma \) and \( Z Z \gamma ^ { * } \) couplings. The diagrams (2) and (3) of Fig. 4 not only are required by Bose symmetry but, once their amplitudes are added up, ultraviolet divergences cancel out. After the Passarino-Veltman method is applied, we obtain the following result

where q is now the four-momentum of the off-shell Z boson. We note that all the properties discussed above are also present in this form factor. In the next section we will evaluate the CP-violating TNGBCs for illustrative values of the charged scalar boson masses and the four-momentum of the virtual gauge boson.


图 4：沪深 300 和食品饮料指数

资料来源：Wind,长江证券研究所

图 5：食品饮料指数相对沪深 300 的累计超额收益

资料来源：Wind,长江证券研究所

图 6：各线白酒相对沪深 300 估值（TTM）

资料来源：Wind,长江证券研究所

图 7：白酒和大众品相对估值对比

资料来源：Wind,长江证券研究所


On behalf of the board of directors (the “Board”) of Sunfonda Group Holdings Limited (the “Company”), I am pleased to present the interim report of the Company and its subsidiaries (the “Group”) for the six months ended 30 June 2020.

In the first half of 2020, the worldwide outbreak of the novel coronavirus pneumonia (the “COVID-19”) pandemic had an unprecedented impact on the global economy. Currently, the overseas pandemic status and the global economic situation are still relatively complicated. Fortunately, the outbreak has gradually been brought under control and the overall situation has improved in Mainland China. The Chinese government has also successively introduced various measures to promote economic recovery, and the Chinese economy has gradually overcome the adverse impact of the pandemic to enter a phase of gradual recovery. Various economic indicators are improving, China’s basic livelihood is under strong protection, and the long-term positive trend of the economy is relatively clear. In order to cope with the impact of the COVID-19 pandemic and promote the stable operation of the automobile economy, the state and local governments have successively introduced various stimulus policies since February 2020, including provision of financial subsidies, relaxation of purchase restrictions, introduction of “rural subsidy program for vehicles” and promotion of the development of used car market. On the whole, the comprehensive policy guidance for the resumption of work and production and the introduction of a series of policies on automobile consumption have promoted the obvious recovery of the domestic automobile market. According to the information published by the China Association of Automobile Manufacturers, despite a year-on-year decrease for the first half of the year due to the impact of the COVID-19 pandemic, the production and sales volume of passenger vehicles of China has grown for four consecutive months since February 2020, showing an obvious V-shaped recovery in the market, especially the luxury automobile market has continued strong growth, with its market share continuing to increase and reaching new high.

During the first half of 2020, in the circumstance of a decrease of business days due to the impact of the COVID-19 pandemic, the performance of the Group’s brand stores was better than expected. The Group sold 13,296 new automobiles. The revenue from sales of new vehicles amounted to RMB3,950.2 million, representing a slight decrease of 1.0% as compared with the same period in 2019; revenue from after-sales service reached RMB490.7 million, representing a slight decrease of 9.0% as compared with RMB539.3 million for the same period in 2019; and gross profit was approximately RMB314.3 million, representing a decrease of 3.5% as compared with RMB325.8 million for the same period in 2019.

The pandemic has also changed consumers’ travel habits and car purchase plans, and the demand of travelling by private cars has become stronger. In order to cope with the impact of the pandemic, the Group actively adjusted

our operation strategies, and continued to promote innovative development while consolidating our existing core businesses, for which the specific measures it took included but not limited to the introduction and expansion of emerging sales models such as vertical network platforms and we-media, optimisation and adjustment of service processes and organizational structures to enhance customer service experience, etc. Particularly, since April 2020, the Group has launched a customer interview column, which was well received. Subsequently, the Group successfully organised test ride and test drive activities for the media, which were also widely recognised, and expanded brand awareness and comprehensive influence as well. Through unremitting efforts, the overall business of the Group has still maintained a good momentum of development in the spread of the pandemic. At the same time, the Group will always maintain a sense of crisis and fighting spirit to ensure that we can continuously exploit our pioneering advantages in a complex market environment.

Due to the impact of the pandemic, the global economy has been greatly impacted, and China’s economy is also facing great challenges and pressures, consumers’ purchasing power may decline under such circumstances. We expect that the domestic and even the global automobile markets will still face great challenges in the second half of 2020. In such a complex automobile market environment, on the one hand, the Group will stay alert to the macroeconomy, and timely adjust the brand structure according to the changes in market conditions and the market demand to enhance market competitiveness. On the other hand, the Group will focus on customer needs to develop new online sales models, improve efficiency through service process optimisation and digital services, and attract more customers by improving customer experience, in an effort to create more returns for shareholders.

On behalf of the Board, I would like to express our sincere gratitude to all shareholders and business partners for their continued trust and support to the Group, and our sincere gratitude to all employees for their unremitting efforts. In a complex economic environment, all staff across the Group are urged to make concerted efforts to work hard, steadily and innovatively move forward, and strive to promote overall business growth.


of \( \sim \, 1 0 ^ { 8 - 9 } M _ { \odot } \) do host stars. These halos can be observed as ultrafaint galaxies. These systems are currently the most DM-dominated systems with a ratio of DM to stellar mass significantly exceeding a factor of a hundred. DM halos below this threshold are expected to be depleted of stars and are effectively invisible. Halos at and below the galaxy formation threshold offer a pristine environment in which baryonic physics is subdominant to the dark matter behavior, and hence are substantially less affected by baryonic systematics.

In the following we list some of the promising current and future probes that can probe the abundance and inner composition of halos in the mass range of \( 1 0 ^ { 6 - 9 } M _ { \odot } \).

Ultra-faint dwarf (UFD) galaxies, defined as dark matter-dominated stellar systems with luminosity \( L < 1 0 ^ { 5 } \)\( ; L _ { \odot } \) [435], occupy the smallest dark matter halos that form galaxies, with \( 1 0 ^ { 8 } ~ M _ { \odot } \lesssim M _ { \mathrm { h a l o } } \lesssim 1 0 ^ { 1 0 } ~ M _ { \odot } \)[436, 437]. These systems therefore provide crucial information about the astrophysical processes that govern the faint end of galaxy formation and the dark matter physics that impacts the abundance and properties of halos near the galaxy formation threshold.

To date, ultra-faints have exclusively been detected within distances of ∼ 300 kpc as satellites of the Milky Way. Deep photometric surveys including the Dark Energy Survey have significantly increased the number of known Milky Way satellites in recent years, which now exceeds ∼ 60 systems [438]. Nevertheless, both empirical and theoretical arguments suggest that our census of ultra-faints—even within the Milky Way’s virial radius—is highly incomplete [439–441]. Forthcoming observational facilities including the Vera C. Rubin Ob-servatory and the Nancy Grace Roman Space Telescope are expected to drastically improve upon current ultra-faint detection capabilities. Specifically, Rubin is forecasted to discover the entire population of UFD Milky Way satellites in the Southern hemisphere outside the Galactic disk and with surface brightness down to \( \sim 3 2 \mathrm { m a g ~ a r c s e c } ^ { - 2 } \)[157, 314]. Excitingly, these detections are expected to extend well beyond distances of 300 kpc, allowing UFD populations to be characterized throughout much of the Local Volume [442].

Our understanding of the dark matter halos that host ultra-faints has significantly im-proved over the last decade. In particular, hydrodynamical simulations have started to re-solve the formation and evolution of UFDs in a cosmological context, including as satellites of larger hosts [443–448]. In parallel, semi-analytic and empirical galaxy–halo connection models have been combined with observations to infer ultra-faints’ halo properties; in these models, the number of observable ultra-faints suggests that these systems occupy halos with masses down to \( \sim 1 0 ^ { 8 } \)\( : M _ { \odot } \) (near the “atomic cooling limit”; [436, 437, 449, 450]) or even lower [451, 452]. The fraction of low-mass halos that host UFDs and the scatter in the stellar mass–halo mass relation for these systems are also being studied in order to precisely characterize the properties of halos near the galaxy formation threshold [453–456].

Ultra-faints provide stringent constraints on dark matter particle properties. Specifically, the number of observable UFD Milky Way satellites informs dark matter physics that sup-presses the present-day abundance of dark matter halos with masses of \( \sim 1 0 ^ { 8 } ~ M _ { \odot } \), yielding

lower limits on the mass of thermal relic warm dark matter of ∼ 5 keV [449, 457–466] and on the mass of ultra-light dark matter of \( \sim \, 1 0 ^ { - 2 1 } \) eV [464, 467]. Similar analyses con-strain the strength of dark matter–Standard Model interactions at the \( \sim ~ 1 0 ^ { - 3 0 } \mathrm { { c m } ^ { 2 } } \) level[29, 154, 155, 464] and the dark matter particle lifetime at the ∼ 10 Gyr level [468, 469].Furthermore, stellar velocity dispersion measurements for brighter dwarf galaxies inform the strength and velocity-dependence of dark matter self-interactions, with sensitivity to cross sections of \( \sim 1 \mathrm { c m ^ { 2 } } \) \( \mathrm { g } ^ { - 1 } \)[470, 471], and combining measurements of UFD internal dynamics from upcoming spectroscopic facilities and giant segmented mirror telescopes [472] with their population statistics will further inform self-interacting dark matter models [473–475].

The forthcoming observations discussed above are expected to increase the sample of known UFDs near the galaxy formation threshold, reducing statistical uncertainties and improving the corresponding dark matter constraints. For example, Rubin observations are forecasted to probe halo masses below \( \sim 1 0 ^ { 8 } \; M _ { \odot } \) [157]. If these halos are occupied by ultra-faints, these observations will provide evidence for the existence of galaxies formed through molecular hydrogen cooling; otherwise, they will determine the halo mass threshold and stochasticity associated with galaxy formation. Thus, combining these measurements with purely gravitational probes of small-scale structure will enable the detection of completely dark halos.

The intergalactic medium (IGM) is the rarefied gas that fills the vast volumes between the galaxies in the Universe. Physical effects, ranging from the nature of dark matter to the radiation from star-forming galaxies and quasars, set the observable properties of the IGM, making the IGM a powerful probe of both fundamental physics and astrophysics. Baryons in the IGM trace dark matter fluctuations on Mpc scales, while on smaller (\( \lesssim \) 100 kpc scales) the \( T \sim 1 0 ^ { 4 } \mathrm { K } \) gas is pressure supported against gravitational collapse. While the IGM is sensitive to the Epoch of Reionization [476–478], complex and poorly understood physical processes related to galaxy formation play only a minor role in determining its structure[479, 480].

Forward modeling the structure of the IGM for a given cosmological and DM scenario is a theoretically well-posed problem, albeit requiring expensive cosmological hydro-dynamical simulations. Despite this apparent simplicity, accurate simulations of the IGM are com-putationally challenging because of the multi-scale nature of the problem [481]. A spatial resolution of \( \approx \) 20 kpc is required to resolve the density structure of the IGM, while a rela-tively large box size is required to capture the large-scale power, to obtain a fair sample of the Universe, and to model the topology of reionization.

These characteristics of the Lyman-\( \alpha \) flux power spectrum have allowed for some of the tightest constraints on the nature of dark matter clustering [482–487]. Current anal-yses have been shown to be sensitive to the scale of either a suppression [488, 489] or an enhancement[490, 491] of the small scale power. These dark matter constraints come from high-quality observations of a the few currently available (∼ 100) high redshift (\( z > \) 4) quasar spectra obtained with high resolution instruments (\( R \sim \) 80, 000) and high signal-to-noise observations (\( S / N \sim \) 100). With these spectra, surveys are able to measure scales to wavenumbers of \( k \sim \) 20 h/Mpc [478, 492]. Notably these surveys are currently limited by


. Based on our insights into the prospects of the apparel and textile industry, we entered into the textile industry in the 1980s. According to Frost & Sullivan, there has been an increasing trend in the popularity of stretchable denim garments and hence, stretchable denim fabric has a relatively higher profit margin. We believe that we are well-positioned and have the competitive strength to further our business in the stretchable denim fabric market.

. In view of the anticipated industry growth, our expanding clientele, increasing demand for our stretchable denim fabrics and rising quality standards of customers, we plan to procure slasher dyeing, weaving, finishing (desizing and shrinking), ozone bleaching and washing machines in order to increase our production capacity and enhance our product development capability. Please see ‘‘Production — Our machinery purchase plan’’ in this section for further details. Our Directors believe that the above machinery will further our capability in developing and producing denim fabrics of even greater aesthetics and functionality which drives our business by obtaining more orders from existing customers and attracting new apparel brands to procure denim fabrics in the future.

We believe the foregoing anticipated industry growth and our continuous efforts in business development, in particular clientele expansion, will sustain our business growth on one hand and reduce the proportion of revenue from certain apparel brands to our revenue on the other hand.

# Business relationship among our Group, apparel brands and garment manufacturers

The following diagram illustrates the typical business relationship among our Group, apparel brands and garment manufacturers:

# Principal contractual terms and credit terms

During the Track Record Period, we generally entered into individual sales orders and did not enter into long-term contracts with our garment manufacturer customers.

The terms typically included in these sales orders are product specifications, unit price, volume, delivery schedule and payment terms which are agreed between our Group and apparel brands. Garment manufacturers must procure denim fabrics from designated suppliers and in accordance with purchase

terms as instructed by the apparel brands. Payments are usually made by cash or letters of credit. We granted credit periods of up to 60 days to customers who have long business relationship with us and good payment record.

The finished products are generally delivered to garment manufacturers on the basis of FOB. However, we sometimes deliver on the basis of CIF or CNF to certain overseas garment manufacturers.

We generally engage third party logistic service providers for the delivery of our denim fabrics to our customers in both overseas and PRC sales. For FY2015, FY2016 and FY2017, our delivery and export related expenses amounted to HK\$4.4 million, HK\$6.0 million and HK\$7.6 million, respectively.

During the Track Record Period and up to the Latest Practicable Date, we did not experience any material disruption to our delivery arrangements and we did not suffer any material loss or pay any compensation as a result of delays in deliveries to our customers.

We carry out internal quality control assessments to ensure that the finished products comply with the specifications or quality standards of the apparel brands. Apparel brands may also designate their quality control examiners to assess the quality of our finished products. If the results of either one of the assessments fail to meet the pre-determined specifications or quality standards, we may arrange replacement for the returned products on a case-by-case basis.

Our Directors confirm that during the Track Record Period and up to the Latest Practicable Date, our Group (i) did not receive any material complaints or claims from our customers in relation to the quality of our denim fabrics; and (ii) did not have any material sales return or product recall.

We place great emphasis on quality standards and are committed to manufacturing excellent quality denim fabrics. As at the Latest Practicable Date, there were 58 employees in our quality control team, of which two were based in Hong Kong and 56 were based in the PRC.

We have implemented and put in place the following internal quality control guidelines and measures throughout our production process from use of qualified suppliers, subcontracting to packaging:

Our suppliers are selected based on, among other things, price and payment terms, product and service quality, operation scale, and geographical proximity to our production facilities.

A qualified supplier list for our principal raw materials approved by our executive Directors is maintained by our procurement team and all principal raw materials must be purchased from our qualified suppliers. We closely monitor the performance of our suppliers from time to time. Besides, we


announcements by us or our competitors of significant acquisitions or dispositions; the lack of securities analysts covering our common stock; changes in earnings estimates by securities analysts or our ability to meet those estimates; the operating and stock price performance of comparable companies; overall market fluctuations; and general economic conditions. Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock.

# Your percentage ownership in Wyndham Worldwide may be diluted in the future.

Your percentage ownership in Wyndham Worldwide may be diluted in the future because of equity awards that we have and expect will be granted over time to our Directors and employees. In addition, our Board may issue shares of our common and preferred stock and debt securities convertible into shares of our common and preferred stock up to certain regulatory thresholds without shareholder approval.

# Provisions in our certificate of incorporation and by-laws and under Delaware law may prevent or delay an acquisition of Wyndham Worldwide which could impact the trading price of our common stock.

Our certificate of incorporation and by-laws and Delaware law contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive and to encourage prospective acquirers to negotiate with our Board rather than to attempt a hostile takeover. These provisions include that stockholders do not have the right to act by written consent, rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings, the right of our Board to issue preferred stock without stockholder approval and limitations on the right of stockholders to remove directors. Delaware law also imposes restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock.

# We cannot provide assurance that we will continue to pay dividends or purchase shares of our common stock under our stock repurchase program.

There can be no assurance that we will have sufficient cash or surplus under Delaware law to be able to continue to pay dividends or purchase shares of our common stock under our stock repurchase program. This may result from extraordinary cash expenses, actual expenses exceeding contemplated costs, funding of capital expenditures, increases in reserves or lack of available capital. Our Board may also suspend the payment of dividends or our stock repurchase program if the Board deems such action to be in the best interests of our stockholders. If we do not pay dividends, the price of our common stock must appreciate for you to realize a gain on your investment in Wyndham Worldwide. This appreciation may not occur and our stock may in fact depreciate in value.

# We are responsible for certain of Cendant’s contingent and other corporate liabilities.

Under the separation agreement and the tax sharing agreement that we executed with Cendant (now Avis Budget Group) and former Cendant units, Realogy and Travelport, we and Realogy generally are responsible for 37.5% and 62.5%, respectively, of certain of Cendant’s contingent and other corporate liabilities and associated costs including certain contingent and other corporate liabilities of Cendant or its subsidiaries to the extent incurred on or prior to August 23, 2006. These liabilities include those relating to certain of Cendant’s terminated or divested businesses, the Travelport sale, certain Cendant-related litigation, actions with respect to the separation plan and payments under certain contracts that were not allocated to any specific party in connection with the separation.

If any party responsible for the liabilities described above were to default on its obligations, each non-defaulting party including Avis Budget would be required to pay an equal portion of the amounts in default. Accordingly, we could under certain circumstances be obligated to pay amounts in excess of our share of the assumed obligations related to such liabilities including associated costs. In accordance with the terms of the separation agreement, Realogy posted a letter of credit in April 2007 for our and Cendant’s benefit to cover its estimated share of the assumed liabilities discussed above although there can be no assurance that such letter of credit will be sufficient to cover Realogy’s actual obligations if they arise.

# We may be required to write-off all or a portion of the remaining value of our goodwill or other intangibles of companies we have acquired.

Under generally accepted accounting principles we review our intangible assets, including goodwill, for impairment at least annually or when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill or other intangible assets may not be recoverable include a sustained decline in our stock price and market capitalization, reduced future cash flow estimates and slower

growth rates in our industry. We may be required to record a significant non-cash impairment charge in our financial statements during the period in which any impairment of our goodwill or other intangible assets is determined, negatively impacting our results of operations and stockholders’ equity.

Our corporate headquarters is located in a leased office at 22 Sylvan Way in Parsippany, New Jersey, which lease expires in 2029. We also have a leased office in Virginia Beach, Virginia for our Associate Service Center, which lease expires in 2019.

The main corporate operations of our hotel group business share office space in our corporate headquarters leased in Parsippany, New Jersey. Our hotel group business also leases space for its reservations centers and/or data warehouses in Phoenix, Arizona and Saint John, New Brunswick, Canada pursuant to leases that expire in 2020. In addition, our hotel group business has nine leases for office space in various countries outside the U.S. with varying expiration dates ranging between 2017 and 2021. Our hotel group business also has three leases for office space within the U.S. with varying expiration dates ranging between 2018 and 2020. All leases that are due to expire in 2017 are presently under review related to our ongoing requirements.

Wyndham Destination Network has its main corporate operations in a leased office in Parsippany, New Jersey, which lease expires in 2029. Wyndham Destination Network also owns 30 properties, of which 20 are located in the U.S., five are located in Denmark, four are located in the U.K. and one is located in Mexico. Wyndham Destination Network has 175 leased offices that expire between 2017 through 2035, of which 83 are located in North America, 81 are located in Europe, eight are located in Latin America and three are located in Asia Pacific. All leases that are due to expire in 2017 are presently under review related to our ongoing requirements.

Our vacation ownership business has its main corporate operations in Orlando, Florida pursuant to several leases, which begin to expire in 2025. Our vacation ownership business also has leased spaces in Redmond, Washington; Springfield, Missouri; Chicago, Illinois; Las Vegas, Nevada; and Bundall, Australia with various expiration dates. Our vacation ownership business leases space for administrative functions in Las Vegas, Nevada that expires in 2028 and in Northbrook, Illinois that expires in 2017. In addition, the vacation ownership business leases approximately 113 marketing and sales offices, of which approximately 96 are located throughout the U.S., nine are located in Australia, four are located in the Caribbean, three are located in Mexico, and one is located in Canada with varying expiration dates. All leases that are due to expire in 2017 are presently under review related to our ongoing requirements.

We are involved in various claims and lawsuits arising in the ordinary course of business, none of which, in the opinion of management, is expected to have a material adverse effect on our results of operations or financial condition. See Note 17 to the Consolidated Financial Statements for a description of claims and legal actions arising in the ordinary course of our business and Note 23 to the Consolidated Financial Statements for a description of our obligations regarding Cendant contingent litigation.