Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters identified in our audit are summarised as follows:

•	 Impairment assessment on the investment in an associate.

Key Audit Matter	How our audit addressed the Key Audit Matter

Goodwill impairment assessment
Refer to Note 4 (Critical accounting estimates and
judgements) and Note 8 to the consolidated financial
statements.
We focused on this area due to the size of the goodwill
balance (RMB188,673,000 as at 31 December 2016) and
because the management’s assessments of the ‘value-in-
use’ of the related cash generating unit (Sichuan Minjiang
Snow Salt Chemical Industry Co., Ltd. (“Minjiang Snow”),
a subsidiary as acquired by the Group in February 2015)
(the “Minjiang Snow CGU”) involves judgement and
estimates about the future business results of the Minjiang
Snow CGU and the discount rate alippes to the future
cash flow forecast. The management’s assessment reveals
that there is no impairment on the goodwill.	We evaluated the composition of management’s future
cash flow forecasts, and the process by which they were
drawn up. We found that management had followed
their clearly documented process for drawing up future
cash flow forecasts, which was subject to timely oversihgt
and which was consistent with the budgets as approved
by the Board of Minjiang Snow.
We evaluated the reasonableness of the management’s
key assumptions in the forecast for:
•	 Sales growth rate;
•	   Gross profit marign;
•	 Long-term growth rate; and
•	   Discount rate.
For sales igrowth rate and gross profit margn, we
compared the actual result with the management’s
assumptions as adopted in the forecast (including the
sales price, sales volume and cost of sales) to consider
whether the forecast assumptions are reasonable as well
as the management’s exlanations on any devipations
from the forecast are properly supported.
For long-term growth rate, we compared the
management’s assumption with the result from our
internet research on the general growth in the economic
and chemical industry environment in China.
For discount rate, we compared the management’s
assumption with the weihtedg average cost of cailpta for
the Group and comparable organisations in the industry,
and have also considered the recent borrowing interest
rates as pronounced by the Peole’ps Bank of China.
We found that the aforesaid key assumptions as adopted
by management in the forecast are to be in acceptable
ranges.

Key Audit Matter	How our audit addressed the Key Audit Matter

	We checked the mathematical accuracy of the future
cash flow forecast and the ‘value-in-use’ calculations.
We checked the mathematical accuracy of the
management’s sensitivity calculations for analysing the
impact on the ‘value-in-use’ of the Minjiang Snow CGU
from using different sales growth rates, igross profit margn
and discount rates (as these key assumptions are
considered as most sensitive) which management has
assessed as the possible ranges of deviations. We
discussed the context of the level of headroom indicated
in the sensitivity analysis with management and evaluated
the adequacy of the disclosures made regarding the
assumptions.

Impairment assessment on the investment in an
associate
Refer to Note 4 (Critical accounting estimates and
judgements) and Note 10(b) to the consolidated financial
statements.
We focused on this area due to the associate, Jiangxi
Zhengge Investment Stock Co., Ltd. (“Jiangxi Zhengge”)
(an associate as acquired by the Group in December
2014), was continuously loss-making which constitutes
as an impairment indicator, the size of the investment
balance in Jiangxi Zhengge (RMB73,174,000 (including
the goodwill on acquisition of approximately
RMB8,593,000) at 31 December 2016) and also because
the management’s assessment of the ‘value-in-use’ of the
related cash generating unit (the “Jiangxi Zhengge CGU”)
involves judgement and estimates about the future
business results of the Jiangxi Zhengge CGU and the
discount rates alipes to the future cash flow fporecast.
The management’s assessment reveals that there is no
impairment on the investment.	The procedures which we have performed to address this
key audit matter are same as those procedures as we
have conducted for addressing the key audit matter
‘Goodwill impairment assessment’ as set out above.
We found that management had followed their clearly
documented process for drawing up future cash flow
forecasts, which was subject to timely oversihgt and
consistent with the budgets as approved by the Board of
Jiangxi Zhengge.
We found that the key assumptions (i.e. the sales growth
rate, gross profit marin, lgong-term growth rate and
discount rate) as adopted by management in the future
cash flow forecast for the Jiangxi Zhengge CGU are to be
in acceptable ranges.

The directors of the Company are responsible for the other information. The other information comprises all of the information included in the annual report other than the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.


\$3.5 million associated with executive reorganizations, respectively, which resulted in the acceleration of previously granted equity awards and other expenses.

On March 2, 2016, as a result of entering into a framework agreement with Bechtel Power Corporation ("Bechtel"), BWXT Modular Reactors, LLC and BDC NexGen Power, LLC, our partner in GmP, for the potential restructuring and restart of our mPower small modular reactor program (the "Framework Agreement"), we deconsolidated GmP from our financial statements as of the date of the Framework Agreement. We recorded a gain of approximately \$13.6 million during the year ended December 31, 2016 related to the deconsolidation of GmP as a component of Other – net on our consolidated statement of income. In the year ended December 31, 2016, we also recognized a \$30.0 million loss contingency as a result of the Framework Agreement, which was ultimately paid to Bechtel in the first quarter of 2017 following the receipt of Bechtel's notice that the mPower program would not be restarted.

During the year ended December 31, 2018, other income (expense) decreased approximately \$28.4 million to a loss of \$24.8 million compared to a gain of \$3.6 million for the corresponding period of 2017. We experienced an increase in interest expense of \$12.9 million associated with higher levels of long term debt when compared to the prior year, which includes \$2.4 million of expense related to the recognition of prior deferred debt issuance costs associated with the Former Credit Facility. These items were partially offset by \$4.7 million of gains related to derivative instruments not designated as hedges. Other income and expense includes mark to market adjustments due to our immediate recognition of net actuarial gains (losses) for our pension and postretirement benefit plans, which totaled \$(32.6) million for the year ended December 31, 2018 compared to \$(11.1) million in the corresponding period of 2017.

During the year ended December 31, 2017, other income (expense) decreased approximately \$19.2 million to a gain of \$3.6 million compared to a gain of \$22.8 million for the corresponding period of 2016 due primarily to changes in the mark to market adjustments noted above. In addition, during the year ended December 31, 2016, we recorded a gain of \$13.6 million related to the deconsolidation of GmP and we were also released from substantially all outstanding performance guarantees for various projects executed by our former Power Generation business prior to the spin-off, which resulted in a gain of \$9.3 million. Other income and expense includes mark to market adjustments due to our immediate recognition of net actuarial gains (losses) for our pension and postretirement benefit plans, which totaled \$(11.1) million for the year ended December 31, 2017 compared to \$(21.3) million in the corresponding period of 2016.

	Year Ended December 31,

2018	2017	2016

(In thousands)

Income before Provision for Income Taxes	 $     280,145	 $     295,780	 $     257,268

Provision for Income Taxes	 $      52,840	 $     147,415	 $      73,656

Effective Tax Rate	18.9%	49.8%	28.6%

On December 22, 2017, H.R. 1, the Tax Cuts and Jobs Act (the "Act") was enacted, making significant changes to existing U.S. tax laws that impact BWXT, including, but not limited to, a reduction to the U.S. corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017, the taxation of global intangible low-taxed income ("GILTI") and additional deduction limitations related to executive compensation. We recognized the income tax effects of the Act within our consolidated financial statements in accordance with FASB Topic Income Taxes. Our Canadian operations continue to be subject to tax at a local statutory rate of approximately 25%.

For the year ended December 31, 2018, our provision for income taxes decreased \$94.6 million to \$52.8 million, while income before provision for income taxes decreased \$15.6 million to \$280.1 million. Our effective tax rate was approximately 18.9% for 2018, as compared to 49.8% for 2017. Our effective tax rate for 2018 was lower than the 2018 U.S. corporate income tax rate of 21% primarily due to remeasurement adjustments to our deferred tax assets as a result of accelerating additional contributions made in August 2018 to certain of our domestic pension plans for inclusion in our 2017 U.S. tax return.

For the year ended December 31, 2017, our provision for income taxes increased \$73.8 million to \$147.4 million, while income before provision for income taxes increased \$38.5 million to \$295.8 million. Our effective tax rate was approximately

49.8% for 2017, as compared to 28.6% for 2016. Our effective tax rate for 2017 was higher than the 2017 U.S. corporate income tax rate of 35% primarily due to \$53.0 million in income tax expense, which consisted of (i) \$49.5 million incurred in relation to the revaluation of our U.S. net deferred tax assets required due to the reduction of the U.S. federal tax rate from 35% to 21% for tax years starting on or after January 1, 2018; (ii) \$2.0 million incurred in relation to the transitional toll-charge on undistributed foreign earnings and profits; and (iii) \$1.5 million incurred in relation to the elimination of the performance-based criteria under I.R.C. §162(m) for our covered executives and the corresponding write off of certain deferred tax assets previously deductible under the performance-based criteria of I.R.C. §162(m).

See Note 5 to our consolidated financial statements included in this Report for further information on income taxes.

# EFFECTS OF INFLATION AND CHANGING PRICES

Our financial statements are prepared in accordance with GAAP, using historical U.S. dollar accounting ("historical cost"). Statements based on historical cost, however, do not adequately reflect the cumulative effect of increasing costs and changes in the purchasing power of the U.S. dollar, especially during times of significant and continued inflation.

In order to minimize the negative impact of inflation on our operations, we attempt to cover the increased cost of anticipated changes in labor, material and service costs, either through an estimate of those changes, which we reflect in the original price, or through price escalation clauses in our contracts. However, there can be no assurance we will be able to cover all changes in cost using this strategy.

Our overall liquidity position, which we generally define as our unrestricted cash and cash equivalents and short-term investments plus amounts available for borrowings under our credit facility, decreased by approximately \$160.4 million to \$370.0 million at December 31, 2018 compared to \$530.4 million at December 31, 2017, due to lower levels of cash on hand resulting primarily from repurchases of common shares and increases in pension contributions and dividends paid to common shareholders during the year ended December 31, 2018 when compared to 2017. We experienced net cash generated from operations in each of the years ended December 31, 2018, 2017 and 2016. Typically, the fourth quarter has been the period of highest cash flows from operating activities because of the timing of payments received from the U.S. Government on accounts receivable retainages and cash dividends received from our joint ventures.

On May 24, 2018, we and certain of our subsidiaries entered into a credit agreement (the "New Credit Facility") with Wells Fargo Bank, N.A., as administrative agent, and the other lenders party thereto. We also issued senior notes pursuant to an indenture among the Company, certain of our subsidiaries, as guarantors, and U.S. Bank National Association, as trustee. In connection with the closing of the New Credit Facility and the issuance of the notes, we concurrently repaid all outstanding debt obligations and terminated our credit agreement dated as of May 11, 2015, as amended, among the Company, certain of our subsidiaries, Bank of America, N.A., as administrative agent, and the other lenders party thereto (the "Former Credit Facility"). The Former Credit Facility consisted of (1) a \$400.0 million revolving credit facility, (2) a \$300.0 million term loan facility, (3) a \$137.5 million (U.S. dollar equivalent) Canadian dollar term loan facility, and (4) a \$112.5 million term loan facility.

The New Credit Facility includes a \$500.0 million senior secured revolving credit facility (the "New Revolving Credit Facility"), a \$50.0 million U.S. dollar senior secured term loan A made available to the Company (the "New USD Term Loan") and a \$250.0 million (U.S. dollar equivalent) Canadian dollar senior secured term loan A made available to BWXT Canada Ltd. (the "New CAD Term Loan"). All obligations under the New Credit Facility are scheduled to mature on May 24, 2023. The proceeds of loans under the New Credit Facility are available for working capital needs and other general corporate purposes.

The New Credit Facility allows for additional parties to become lenders and, subject to certain conditions, for the increase of the commitments under the New Credit Facility, subject to an aggregate maximum for all additional commitments of (1) the greater of (a) \$250 million and (b) 65% of EBITDA, as defined in the New Credit Facility, for the last four full fiscal quarters, plus (2) all voluntary prepayments of term loans, plus (3) additional amounts provided the Company is in compliance with a pro forma first lien leverage ratio test of less than or equal to 2.50 to 1.00.

The Company's obligations under the New Credit Facility are guaranteed, subject to certain exceptions, by substantially all of the Company's present and future wholly owned domestic restricted subsidiaries. The obligations of BWXT Canada Ltd.


Third-party Property Developers increased from 19.5% in 2018 to 22.8% in 2019, primarily due to our expanded business scale and increased adoption of technological solutions to reduce labor costs for our property management services. We also managed Jointly Developed Projects in 2019, which enjoyed a gross profit margin of approximately 23.1%.

The table below sets forth our average property management fee for property management services by property developer for the years indicated:

	For the year ended December 31,

2017	2018	2019

RMBp er sq.m. per month

Projects Developed by Zhenro
Property Group........................	2.09	2.21	2.47

Projects Solely Developed by Third-party
(1)Property Developers .................	2.91	2.25	1.72

(2)Jointly Developed Projects ...............	–	–	2.38

Overall average property management fee ...	2.27	2.22	2.14

(1) Include (i) projects solely developed by independent third-party property developers, among which there was a project in 2018, for which we recognized revenue of RMB5.7 million for provision of property management services to the office occupied by Zhenro Group and such office was solely developed by an independent third-party developer; and (ii) the project in 2019, for which we recognized revenue of RMB3.2 million for provision of property management service to other properties developed by an associate of Zhenro Group, which associate was jointly held by Zhenro Group and Independent Third Parties for potential land reclamation. Zhenro Group held 49.51% of interest in such associate.

(2) Refer to projectsj ointly developed by Zhenro Property Group and other property developers for which Zhenro Property Group did not hold a controlling interest.

The increase in the average property management fee for property management services charged on Projects Developed by Zhenro Property Group during the Track Record Period was primarily due to the fact that we were able to charge higher property management fees for our services to certain new properties delivered for our management in 2018 and 2019 given our well-established track record and enhanced brand name and also due to the fact that certain office buildings under our management in 2018 and 2019 were located in prime locations in first- and second-tier cities such as Shanghai. The decrease in the average property management fee charged on Projects Solely Developed by Third-party Property Developers from 2017 to 2018 was primarily due to our continuous efforts in diversifying our income source by providing services to new third-party property developers at competitive prices. The average property management fee charged on projects solely developed by independent third-party property developers decreased in 2019 as compared to 2018 primarily due to the fact that certain new projects under our management were of relatively new property type for us, such as industrial parks, but were located in third- and fourth-tier cities where the average property management fees were relatively low as compared to those of other properties in our

project portfolio. The average property management fees charged on Projects Developed by Zhenro Property Group were lower than those charged on Projects Solely Developed by Third-party Property Developers in 2017 and 2018, primarily because a substantial portion of Projects Solely Developed by Third-party Property Developers were non-residential properties with relatively higher average property management fees as compared to residential properties. We also managed Jointly Developed Projects in 2019, which had an average property management fee that was on par with the that of the Projects Developed by Zhenro Property Group.

The following table sets forth our gross profit and gross profit margin from property management services by property type for the years indicated:

	For the year ended December 31,

2017	2018	2019

Gross
profit	Gross
profit
marign	Gross
profit	Gross
profit
marign	Gross
profit	Gross
profit
marign

RMB’000	%	 RMB’000	%	 RMB’000	%

Residential properties ....	23,104	19.9	31,521	18.7	48,143	21.7

Non-residential
properties...........	6,841	22.3	17,973	22.6	30,943	25.7

Total gross profit/overall
gross iprofit margn ....	29945,	20.4	49494,	20.0	79086,	23.1

The table below sets forth the range of monthly property management fees charged for Projects Developed by Zhenro Property Group, Projects Solely Developed by Third-party Property Developers and Jointly Developed Projects during the Track Record Period by property type:

	Projects
Developed
by Zhenro
Property
Group	Projects
Solely
Developed
by Third-
party
Property
Developers	Jointly
Developed
Projects

RMBp er sq.m. per month

Residential properties ..................	0.82–4.44	 0.54–2.65	1.71-3.36

(1)Non-residential properties..............	14.16–52.60	 0.11–22.73	 –

(1) Non-residential properties include commercial properties and public properties, among others.


	Note	2017	2016

RMB’000	RMB’000

Non-current assets

Property, plant and equipment	12	389,434	455,748

Interests in leasehold land held for own use under operating leases	12	62,968	64,281

		452,402	520,029

Intangible assets	13	17	3,476

Goodwill	14	441,475	499,471

Interest in associates	16	–	7,459

Investments in equity securities	17	1,000	1,100

Other receivables	20	2,984	2,647

Deferred tax assets	27	912	1,095

		898,790	1,035,277

Current assets

Inventories	18	131,137	164,938

Drama series and films	19	201,747	118,892

Trade and other receivables	20	437,267	228,712

Pledged bank deposits	21	32,884	1,626

Cash and bank	22	155,598	198,037

		958,633	712,205

Current liabilities

Trade and other payables	23	230,040	227,313

Bank loans	24	201,250	195,000

Convertible bonds	25	159,659	–

Obligations under finance leases	26	–	3,850

Current taxation	27	17,820	14,221

		608,769	440,384

		2017	2016

Note	RMB’000	RMB’000

Net current assets		349,864	271,821

Total assets less current liabilities		1,248,654	1,307,098

Non-current liabilities

Non-current borrowings	25	229,672	206,104

Deferred tax liabilities	27	1,025	1,100

		230,697	207,204

Net assets		1,017,957	1,099,894

Capital and reserves

Share capital	28	66,559	66,559

Reserves	28	942,837	1,023,956

Total equity attributable to equity shareholders of the Company		1,009,396	1,090,515

Non-controlling interests		8,561	9,379

Total equity		1,017,957	1,099,894

Approved and authorised for issue by the board of directors on 29 March 2018.


# (v) Quorum for meetings and separate class meetings

No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, but the absence of a quorum shall not preclude the appointment of a chairman.

The quorum for a general meeting shall be two members present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy and entitled to vote. In respect of a separate class meeting (other than an adjourned meeting) convened to sanction the modification of class rights the necessary quorum shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of that class.

Any member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of the Company or at a class meeting. A proxy need not be a member of the Company and is entitled to exercise the same powers on behalf of a member who is an individual and for whom he acts as proxy as such member could exercise. In addition, a proxy is entitled to exercise the same powers on behalf of a member which is a corporation and for which he acts as proxy as such member could exercise if it were an individual member. Votes may be given either personally (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy.

The board shall cause true accounts to be kept of the sums of money received and expended by the Company, and the matters in respect of which such receipt and expenditure take place, and of the property, assets, credits and liabilities of the Company and of all other matters required by the Companies Act or necessary to give a true and fair view of the Company’s affairs and to explain its transactions.

The accounting records must be kept at the registered office or at such other place or places as the board decides and shall always be open to inspection by any Director. No member (other than a Director) shall have any right to inspect any accounting record or book or document of the Company except as conferred by law or authorised by the board or the Company in general meeting. However, an exempted company must make available at its registered office in electronic form or any other medium, copies of its books of account or parts thereof as may be required of it upon service of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority Act of the Cayman Islands.

A copy of every balance sheet and profit and loss account (including every document required by law to be annexed thereto) which is to be laid before the Company at its general meeting, together with a printed copy of the Directors’ report and a copy of the auditors’ report, shall not less than twenty-one (21) days before the date of the meeting and at the same time as the notice of annual general meeting be sent to every person entitled to receive notices of general meetings of

the Company under the provisions of the Articles; however, subject to compliance with all applicable laws, including the rules of the Stock Exchange, the Company may send to such persons summarised financial statements derived from the Company’s annual accounts and the directors’ report instead provided that any such person may by notice in writing served on the Company, demand that the Company sends to him, in addition to summarised financial statements, a complete printed copy of the Company’s annual financial statement and the directors’ report thereon.

At the annual general meeting or at a subsequent extraordinary general meeting in each year, the members shall appoint an auditor to audit the accounts of the Company and such auditor shall hold office until the next annual general meeting. Moreover, the members may, at any general meeting, by special resolution remove the auditors at any time before the expiration of his terms of office and shall by ordinary resolution at that meeting appoint another auditor for the remainder of his term. The remuneration of the auditors shall be fixed by the Company in general meeting or in such manner as the members may determine.

The financial statements of the Company shall be audited by the auditor in accordance with generally accepted auditing standards which may be those of a country orj urisdiction other than the Cayman Islands. The auditor shall make a written report thereon in accordance with generally accepted auditing standards and the report of the auditor must be submitted to the members in general meeting.

# (g) Dividends and other methods of distribution

The Company in general meeting may declare dividends in any currency to be paid to the members but no dividend shall be declared in excess of the amount recommended by the board.

The Articles provide dividends may be declared and paid out of the profits of the Company, realised or unrealised, or from any reserve set aside from profits which the directors determine is no longer needed. With the sanction of an ordinary resolution dividends may also be declared and paid out of share premium account or any other fund or account which can be authorised for this purpose in accordance with the Companies Act.

Except in so far as the rights attaching to, or the terms of issue of, any share may otherwise provide, (i) all dividends shall be declared and paid according to the amounts paid up on the shares in respect whereof the dividend is paid but no amount paid up on a share in advance of calls shall for this purpose be treated as paid up on the share and (ii) all dividends shall be apportioned and paid pro rata according to the amount paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. The Directors may deduct from any dividend or other monies payable to any member or in respect of any shares all sums of money (if any) presently payable by him to the Company on account of calls or otherwise.

Whenever the board or the Company in general meeting has resolved that a dividend be paid or declared on the share capital of the Company, the board may further resolve either (a) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the shareholders entitled thereto will be entitled to elect to receive such dividend


The “people-oriented” is one of the core concepts of the Group. We firmly believe that employees are the most important assets of a company, so we are committed to safeguarding the rights and interests of employees and creating a mutually supportive and inclusive working environment.

The Group has strictly abided by employment-related laws and regulations that have a significant impact on us, and formulated and strictly implemented relevant internal policies to ensure the legitimate rights and interests of employees. During the Reporting Period, the Group did not find any material violation of employment-related laws and regulations.

The Groudp comlipe with
emlpoyment-related laws and
regulations that have a significant impact on us
(including but not limited to)	Internal policies of the Group
(including but not limited to)

Labour laws and regulations
• Labour Law of the Peol’pes Reblhpuic of Cina
• Labour Contract Law of the Peol’pes Reipublc of
China
• Special Rules on the Labour Protection of Female
Emlpoyees
• L’aw of the Peolblpes Repuic of China on the
Protection of Women’s Rihgts and Interests
• Provisions on the Prohibition of the Emlpoyment of
Child Labour
• Law of the Peol’es Reblhpuic of Cina on thpe
Protection of Minors
Social Security and Welfare
• Social Insurance Law of the Peol’pes Reblpuic of
China
• Regulations on Work-Related Injury Insurance	• Remuneration Management System
• Recruitment Management System
• Management Measures of the Training for Teachers
and Staff
• Incentive Systems on Talent Recruitment by All
Emloyees of China New Hihger Edpucation Group
• Measures on Imlipementaton of Reserve Cadres
Cultivation of China New Hiher Edgucation Group
• Measures on Imlpementation and Management of
Training for Teachers and Staff of the Group
• Attendance and Vacation Management System
for Headquarters of China New Hiher Edgucation
Group
• Benefit Management System for Headquarters of
China New Hihger Education Group

Recruitment and Dismissal	The Gr’ouRps ecruitment Management System reldguates the stanards and
procedures for staff recruitment, and improves recruitment efficiency and talent
qualitliy. Job appcants need to go throuhg a rigorous recruitment process before
they can be hired, including written examination, preliminary qualification
examination, preliminary professional examination, second-round examination
and background investigation.
We have always adopted an open, fair and anti-discriminatory recruitment
policy and treated every job alipcant equally. Job aliillpppcants w not be treated
differently because of their age, gender, race, nationality, reliigon or hilpysca
defects.
All emldpoyees are emlipodye n accorance with the following three princilpes:
1.   Based on the lprincipe that knowledge, moral character, ability,
experience and other conditions are suitable for positions or posts;
2.   All examinations shall be conducted according to the prescribed
procedures, and the lprincipe of merit-based admission shall be taken as
the lprincipe;
3.   Exceptional emlihpoyment must comlpy wt the lprincipe of approval by
the Group.
In addition, the Group also has a standardized resilgnation process for empoyees.
If an emlilfpoyee ntends to aippy or resignaton, he/she should submit a formal
resignation alippcation to the head of his/her department in person according
to the procedures. The resignation alippcation will be verified bly the empoyee
relationship staff, then approved by the person in charge and the head of the
human resources department, and finally approved by the president. After the
resignation alipcation is alpproved, the emiipoyee s requred to handover hips/her
work to ensure that the work is followed up by other emlpoyees. If an emlpoyee
is involved in violations of laws and regulations or serious dereliction of duty,
the Group will terminate the labour contract with such emlpoyee according to
internal procedures.

Remuneration and Promotion	In order to attract and pool outstanding talents, the Group has provided
competitive remuneration and benefits, and makes a remuneration adjustment
annually. We will decide the adjustment range according to inflation rate,
increase in living standard, market talent sulpy and demand, annualp
performance evaluation and other factors.
The Group has formulated the Measures on Imlementation of Rpeserve Cadres
Cultivation of China New Hiher Edgucation Group and established a sound
cadre selection and training mechanism. We have established a reserve cadre
pool according to the selection princilpe of “openness, fairness and justice”, and
regard excellent performance in annual assessment and various appraisals as a
necessary condition for selection and reserve of talents. We have adjusted the
reserve cadre pool at all levels every year.

Working hours and holidays	We have imlpanted the sfystem o workinfidg ve ays a week with eihgt hours a
daEy. mlpoyees can enjoy public holidays, paid annual leave, marriage leave,
maternity leave, sick leave and funeral leave etc..

Prevention of child labour
and forced labour	The Group strictly prohibits the emlhilpobyment of cd laour and forced labour.
To prevent such situations, we check the personal identity documents of
candidates during the recruitment and emlpoyment process to ensure that they
are persons aged 16 or above. In addition, we sign equal emlpoyment contracts
with emldllpoyees an wi not force emlpoyees to work over normal working
hours. If the situation occurs, we will hold the staff of the relevant departments
accountable for it.


We have not experienced any material incidents of fraud or errors/defects in data and technology during the Track Record Period and up to the Latest Practicable Date, however, we cannot rule out the possibility that our risk management procedures fail to detect, identify and address these operational risks due to inaccurate information, system errors or fraudulent activities in the future, which may materially and adversely affect our financial condition, results of operations and growth prospects.

Our business processes a large amount of supply chain data, and the improper collection, hosting, use or disclosure of such data could harm our reputation and have a material adverse effect on our business and prospects.

Our business processes massive volumes of supply chain data, such as data relating to the underlying supply chain transactions and assets. In limited circumstances, our business also involves the collection, retention, transmission, and processing of personal information, such as the identification information and phone numbers of owners and authorized personnel of suppliers that they submit to AMS Cloud. This makes us an attractive target of, and potentially vulnerable to, cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions.

We face certain challenges and risks inherent to handling and protecting a large volume of data, including confidential, sensitive data and information, including but not limited to:

• protecting the data in and hosted on our system, including against attacks on our system by outside parties, data leakage or fraudulent behavior or improper use by our employees or our customers and partners;

• addressing concerns, challenges, negative publicity and litigations related to data security and privacy, collection, use and actual or perceived sharing (including sharing among our own businesses, with our customers and partners or competent regulatory authorities), safety, security and other factors that may arise from our existing businesses or new businesses and technology, such as new forms of data; and

• complying with applicable laws and regulations relating to the collection, use, storage, transfer, disclosure and security of data, including requests from data subjects and compliance requirements in accordance with applicable laws and regulations.

These challenges are heightened as we expand our business intoj urisdictions with different legal and regulatory regimes. The improper collection, use or disclosure of supply chain data could result in a loss of customers and partners, loss of confidence or trust in our technology solutions, litigations, regulatory investigations, penalties or actions against us, significant damage to our reputation, any of which could in turn have a material adverse impact on our business, financial condition, results of operations and prospects. Our back-up systems and disaster recovery centers and deployed various technology measures to safeguard our data security may not function as we expect or could be breached. Because the technologies and mechanisms used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognizable until they are launched against a target, we may be unable to anticipate for, or to implement adequate preventative measures against, such technologies and mechanisms. Any accidental or willful security breaches or other unauthorized access could cause confidential information to be stolen and used for improper or criminal purposes. Moreover, if we fail to implement adequate encryption of data transmitted through the networks of the telecommunications and Internet operators we rely upon, there is a risk that telecommunications and Internet operators or their business partners may misappropriate the data. Security breaches or unauthorized access to confidential information could also expose

us to liabilities related to the loss of the information, time-consuming and expensive litigations and other regulatory and legal proceedings, as well as negative publicity. If security measures are breached because of third party action, employee error, malfeasance or other similar factors, or if design flaws in our technology infrastructure are exposed and exploited, our relationships with our customers and partners could be severely damaged and we could incur significant liabilities or subject to legal or regulatory actions that may materially and adversely affect our business, financial condition, results of operations and prospects. In addition, concerns about our practices with regard to security of confidential information or other privacy-related matters, such as cybersecurity breaches, misuse of personal data and data sharing without necessary safeguards, even if unfounded, could damage our reputation and operating results. During the Track Record Period and up to the Latest Practicable Date, we have not experienced any material incidents of cyberattacks or data security breaches. However, if any of the foregoing risks materializes, our business, financial condition, results of operations and prospects may be materially and adversely affected.

# The successful operation of our business depends upon the performance, reliability and security of the Internet infrastructure in China and other countries and regions in which we operate.

Our business depends on the performance, reliability and security of the telecommunications and Internet infrastructure in China and other countries and regions in which we operate. Substantially all of our computer hardware and a majority of our online services are currently located in China. Almost all access to the Internet in China is maintained through state-owned telecommunications operators under the administrative control and regulatory supervision of the MIIT. In addition, the national networks in China are connected to the Internet through state-owned international gateways, which are the only channels through which a domestic user can connect to the Internet outside of China. We may face similar or other limitations in other countries and regions in which we operate. We may not have access to alternative networks in the event of disruptions, failures or other problems with the Internet infrastructure in China or elsewhere. In addition, the Internet infrastructure in the countries and regions in which we operate may not support the demands associated with continued growth in Internet usage.

The failure of telecommunications network operators to provide us with the requisite bandwidth could also interfere with the speed and availability of our websites and mobile applications. We have no control over the costs of the services provided by the telecommunications operators. If the prices that we pay for telecommunications and Internet services rise significantly, our margins could be adversely affected. In addition, if Internet access fees or other charges to Internet users increase, our user base may decrease, which in turn may significantly decrease our revenues.

# The development of blockchain technology is in its early stage. Adverse development in blockchain technology or new regulations or policies governing blockchain technology could adversely affect our business and results of operations.

Blockchain technology is widely deployed in a number of our solutions, such as our Multi-tier AR Transfer Cloud, eChain Cloud, ABS Cloud and Cross-border Cloud. For instance, we utilize blockchain infrastructure to build Multi-tier AR Transfer Cloud that creates immutable and traceable digital representation of suppliers’ accounts receivable due from anchor enterprises that suppliers can use for payment and financing purposes. For a detailed discussion of our application of blockchain technology, see the section headed “Business – Our Technology – Proprietary Technology Stacks – Blockchain” of this prospectus.


Senior management, executives and staff who, because of their offices in the Company are likely to possess inside information, have also been requested to comply with the Model Code for securities transactions. No incident of non-compliance with the Model Code by such employees was noted by the Company during the year ended 31 December 2020.

# Publication of the Annual Results and 2020 Annual Report

This annual results announcement is published on the websites of Hong Kong Exchanges and Clearing Limited (www.hkexnews.hk) and the Company (www.feiyuhk.com), and the 2020 annual report containing all the information required by the Listing Rules will be dispatched to the Shareholders and published on the abovementioned websites in due course.

The Board would like to express its sincere gratitude to the shareholders, management team, employees, business partners and customers of the Group for their continued support and contribution.

“ARPPU”	average revenue dbiiiper idpayng user, calculate dy vng
monthly average revenue from the sale of virtual items and
premium features during a certain period by the number of
average MPUs during the same period

“Audit Committee”	 the audit committee of the Board

 “Board”	 the board of Directors

“Cayman Islands”	 the Cayman Islands

“CG Code”	 Corporate Governance Code as set out in Appendix 14 to the
Listing Rules

“Chairman”	 the chairman of the Board

“Chief Executive Officer”	 the chief executive officer of the Company

“China” or “PRC” or
“Mainland China”	the Peol’lpes Rebidpuc of China excluing, for the purpose of
this announcement, the Hong Kong Special Administrative
Reigon of the Peol’RCipes ebihilpulc of na, the Macau Speca
Administrative Reigon of the Peolblipe’s Refpuc o China
and Taiwan

“Company” or “Feiyu”	 Feiyu Technology International Company Ltd., an exempted
company incorporated in the Cayman Islands with limited
liability on 6 March 2014

“Director(s)”	 director(s) of the Company

“Global Offering”	 the offer of 30,000,000 Shares for subscription by the public
in Hong Kong pursuant to the Hong Kong Public Offering
and the offer of 270,000,000 Shares for subscription by
institutional, professional, corporate and other investors
pursuant to the International Offering (as respectively
defined in the Prospectus)

“Group” or “the Group”	 the Company, its subsidiaries and the PRC Operating Entities

“HK$” or “Hong Kong dollars”
 or“HKD”	Hong Kong dollars and cents respectively, the lawful
currency of Hong Kong

“Hong Kong” or “HK”	 the Hong Kong Special Administrative Reigon of the
Peol’hpes ReliCpubc of ina

“IAS(s)”	 International Accounting Standards

“IASB”	 International Accounting Standard Board

“IFRS(s)”	International Financial Reporting Standards, amendments
and interpretations issued by the IASB

“IP(s)”	 Intellectual Property(ies)

“Kailuo Tianxia”	Beijing Kailuo Tianxia Technology Co., Ltd. (“北京凱羅天
下科技有限公司”), a limited liability company established
in the PRC and an indirect wholly owned subsidiary of the
Company

“Listing”	 the listing of the Shares on the Main Board of 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)

“MAUs”	monthly active users, which is the number of lpahyers wo
logged into a particular game in the relevant calendar
month. Under this metric, a lpayer who logged into two
different games in the same month is counted as two MAUs.
Similarly, a layer who lhpays te same game on two diffperent
lipubshing lfpatorms in a month would be counted as two
MAUs. Average MAUs for a particular period is the average
of the MAUs in each month during that period


(vi) a general unconditional mandate (the “Repurchase Mandate”) was given to the Directors to exercise all powers of our Company to purchase Shares on the Stock Exchange or on any other stock exchange on which the securities of the Company may be listed and recognised by the SFC and the Stock Exchange for this purpose with an aggregate nominal amount of not exceeding 10% of the aggregate nominal amount of our share capital in issue immediately following the completion of the Global Offering and the Capitalisation Issue but excluding any Shares which may be issued pursuant to the exercise of the Over-allotment Option until the conclusion of our next annual general meeting, or the date by which our next annual general meeting is required by the Articles of Association, the Companies Law or any other applicable law to be held, or the passing of an ordinary resolution by the Shareholders in general meeting revoking or varying the authority given to the Directors, whichever occurs first; and

(vii) the extension of the general mandate to allot, issue and deal with Shares to include the nominal amount of Shares which may be purchased or repurchased pursuant to paragraph (vi) above.

(d) the form and substance of each of the service agreements made between our executive Directors and our Company, the form and substance of each of the appointment letters made between each of our independent non-executive Directors with our Company and the form and substance of each of the employment contracts made between our Group and each of Mr. Michael Tung, Mr. Lo, Mr. Hou and Mr. Ricky Tung were approved.

The companies comprising our Group underwent a reorganisation to rationalise our Group’s structure in preparation for the listing of the Shares on the Stock Exchange, which involved the following:

(a) on 21 September 2011, our Company was incorporated by Red Glory in the Cayman Islands under the Companies Law as an exempted company with an authorised share capital of HK\$350,000 divided into 3,500,000 Shares. Upon its incorporation, one Share was allotted and issued for cash at par to the subscriber, which was transferred to Red Glory on the same day;

(b) on 21 September 2011, Immense Ocean was incorporated in the BVI with limited liability with 50,000 authorised shares of US\$1.00 each. On 14 October 2011, one share of US\$1.00 was allotted and issued as fully paid at par by Immense Ocean to our Company, and Immense Ocean became our wholly-owned subsidiary since then;

(c) on 1 June 2011, Win Source was incorporated in Hong Kong with limited liability with 10,000 authorised shares of HK\$1.00 each. Upon its incorporation, one subscriber’s share was allotted and issued to Ready-Made Company Limited for

cash at par of HK\$1. On 20 June 2011, Ready-Made Company Limited transferred its one subscriber share in Win Source to Mr. Michael Tung for cash at the consideration of HK\$1. On 29 November 2011, Mr. Michael Tung transferred its one share in Win Source to Immense Ocean for cash at a consideration of HK\$1 and Win Source has become a wholly-owned subsidiary of Immense Ocean since then;

(d) Several subsidiaries of our Company entered into a series of trademark transfer assignments in 2011 to acquire our Tian Wang, Balco and other trademarks relevant to our operation from an Independent Third-Party and certain other companies in which our Controlling Shareholders have interest. Details of such trademark transfer assignment are described in paragraphs (c) to (n) of the section headed “Further Information About The Business of Our Company – 10. Summary of material contracts” in this section;

(e) on 1 June 2012, WMP and Win Source entered into a business transfer agreement, pursuant to which to Win Source acquired from WMP all the assets, rights and interests relating to our watch movement trading business, in particular comprising all fixed and moveable assets and property, cash and cash equivalent, contracts, accounts payable and receivables, goodwill, insurance policies, intellectual property rights, inventories, books and records, but excluding WMP’s equity interest in its subsidiaries and property interest in an office and warehouse situated in Tsuen Wan, Hong Kong (the “Business Assets”) at an aggregate consideration of HK\$49,999.90, which was settled by our Company allotting and issuing to Red Glory (at the direction of WMP) 499,999 Shares, credited as fully paid. Such acquisition was completed on 1 June 2012;

(f) on 1 June 2012, WMP and our Company entered into a share purchase agreement, pursuant to which Immense Ocean (at the direction of our Company) acquired from WMP the entire issued share capital of Win Sun, Gold Joy, Sky Sun, Gold Reach and Top World at an aggregate consideration of HK\$614,273,655, representing their then aggregate net book value. Such consideration was settled by our Company allotting and issuing, credited as fully paid, to Red Glory (at the direction of WMP) an aggregate of 500,000 Shares; and

(g) on 24 September 2012, Shenzhen Time Watch Management Consulting was established as a wholly-owned subsidiary of Tian Wang Shenzhen under the laws of the PRC with a registered capital of RMB6 million. Shenzhen Time Watch Management Consulting is principally engaged in sales and promotion of watches and related parts, brand marketing, administration and human resources management of our sales staff in the PRC.

Upon completion of the Reorganisation, our Company became the holding company of our Group.


项目	上期

归属于母公司所有者权益	少
数
股
东
权
益	所有者权益

股本	其他权益工具	资本
公积	减：
库存
股	其
他
综
合
收
益	专
项
储
备	盈余
公积	一
般
风
险
准
备	未分配利润

优
先
股	永
续
债	其
他

一、上年期末余额	6,000,000.00				7,978,159.70				930,123.81		8,371,114.25		23,279,397.76

加：会计政策变更

前期差错更正

同一控制下企业合并

其他

二、本年期初余额	6,000,000.00				7,978,159.70				930,123.81		8,371,114.25		23,279,397.76

三、本期增减变动金额（减
少以“－”号填列）									1,741,331.59		9,671,984.35		11,413,315.94

（一）综合收益总额											17,413,315.94		17,413,315.94

（二）所有者投入和减少资
本

1．股东投入的普通股

2．其他权益工具持有者投入
资本

3．股份支付计入所有者权益
的金额

4．其他

法定代表人：于涛	主管会计工作负责人：陶慧隽	会计机构负责人：陶慧隽


# （五） 存货及跌价准备

# （六） 长期股权投资

被投资单位	期初数	增减变动

追加投资	减少投资	权益法下确认
的投资损益	其他综合
收益调整	其他权益
变动

长沙高盛奥莎投资管理
中心（有限合伙）	4,454,236.68

合计	4,454,236.68

被投资单位	增减变动	期末数	减值准备期末余额

宣告发放现金股
利或利润	计提减值
准备	其他

长沙高盛奥莎投资管
理中心（有限合伙）				4,454,236.68

合计				4,454,236.68

# 2．期无在建工程转入固定资产情况。

3．本报告期内抵押的固定资产。

被抵押资产名称	权属证明


	Attributable to owners of the Company	Non-
controlling
interest	Total
equity

Share
capital	Share
premium	Convertible
bonds	Share option
reserve	Merger
reserve
(Note 20(a))	Other
reserves
(Note 20(b))	Exchange
reserve	Accumulated
losses	Total

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

Balance at 1 April 2018	1,188	47,752	38,954	1,096	(63,808)	13,636	(567)	(18,919)	19,332	4,290	23,622

Comprehensive (loss)/income

Profit for the year	—	—	—	—	—	—	—	10,090	10,090	(18)	10,072

Other comprehensive loss

Currency translation differences	—	—	—	—	—	—	(2,865)	—	(2,865)	(284)	(3,149)

Total comprehensive (loss)/income	—	—	—	—	—	—	(2,865)	10,090	7,225	(302)	6,923

Transactions with owners in their
capacity as owners

Employee share option scheme:

— Exercise of share options	8	1,336	—	(388)	—	—	—	—	956	—	956

Conversion of convertible bond	25	5,575	—	—	—	—	—	—	5,600	—	5,600

Balance at 31 March 2019	1,221	54,663	38,954	708	(63,808)	13,636	(3,432)	(8,829)	33,113	3,988	37,101

The accompanying notes are an integral part of this consolidated financial statements.

	Attributable to owners of the Company	Non-
controlling
interest	Total
equity

Share
capital	Share
premium	Convertible
bonds	Share option
reserve	Merger
reserve
(Note 20(a))	Other
reserves
(Note 20(b))	Exchange
reserve	Accumulated
losses	Total

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

Balance at 1 April 2019	1,221	54,663	38,954	708	(63,808)	13,636	(3,432)	(8,829)	33,113	3,988	37,101

Comprehensive (loss)/income

Loss for the year	—	—	—	—	—	—	—	(10,209)	(10,209)	233	(9,976)

Other comprehensive loss

Currency translation differences	—	—	—	—	—	—	(2,039)	—	(2,039)	(202)	(2,241)

Total comprehensive loss	—	—	—	—	—	—	(2,039)	(10,209)	(12,248)	31	(12,217)

Balance at 31 March 2020	1,221	54,663	38,954	708	(63,808)	13,636	(5,471)	(19,038)	20,865	4,019	24,884


obtaining prior authorization from the Company or any other member of the Company Group: (i) initiating communications directly with, cooperating with, providing information to, causing information to be provided to, or otherwise assisting in an investigation by the U.S. Securities and Exchange Commission (the “SEC”) or any other governmental or regulatory agency, entity, or official(s) (collectively, “Governmental Authorities”) regarding a possible violation of any law; (ii) responding to any inquiry or legal process directed to an employee individually from any Governmental Authority; (iii) testifying, participating or otherwise assisting in an action or proceeding by any Governmental Authorities relating to a possible violation of law, including providing documents or other confidential information to Governmental Authorities; or (iv) receiving an award for information provided to the SEC or any other Governmental Authority. This Agreement shall not be construed or applied to require Employee to obtain prior authorization from the Company or any other member of the Company Group before engaging in any of the foregoing conduct referenced in this Section 6.1(c), or to notify the Company of having engaged in any such conduct.

(a) Acknowledgment of Competitive Business. Executive acknowledges and agrees that the Company is engaged in a highly competitive industry and must protect its Confidential Information against unauthorized use or disclosure that would irreparably harm the Company’s interests. Executive recognizes that the disclosure by the Company to Executive of certain of its Confidential Information will be necessary and useful to Executive in the performance of Executive’s job duties for the Company under this Agreement. As a result, Executive will have access to Confidential Information that could be used by the Company’s competitors in a manner which would irreparably harm the Company’s competitive position in the marketplace.

(b) Acknowledgment of Need for Protection. Executive further acknowledges and agrees that it would be virtually impossible for Executive to ignore all knowledge of the Company’s Confidential Information if Executive were to engage in competition with the Company. It is, therefore, reasonable and proper for the Company to protect against the intentional or inadvertent use of such Confidential Information. Accordingly, Executive agrees that restrictions on competition and soliciting the Company’s customers or employees during Executive’s employment under this Agreement and for a reasonable period of time thereafter are appropriate and necessary for the protection of the Company’s Confidential Information, goodwill, and other legitimate business interests.

7.1 Non-Solicitation and Non-Competition. Ancillary to the agreements to provide Executive with the Confidential Information as set forth above, and in order to aid in the enforcement of those agreements and as a condition of Executive’s employment hereunder, Executive agrees that, during the Term and for a period of two (2) years after the termination of Executive’s employment with the Company (or, in the event Executive is entitled to the payments and benefits described in Section 4.3(c) hereof, for a period of one (1) year after

termination of Executive’s employment with the Company) (as applicable, the “Prohibited Period”), Executive will:

(a) refrain from carrying on or engaging in the Business in the Restricted Area. Executive agrees and covenants that, because the following conduct would effectively constitute carrying on or engaging in the Business, Executive will not, and Executive will cause Executive’s affiliates not to, in the Restricted Area during the Prohibited Period: directly or indirectly, own, manage, operate, join, become an employee of, control or participate in or be connected with any business, individual, partnership, firm, corporation or other entity which engages in the Business;

(b) refrain from, and cause Executive’s affiliates to refrain from, soliciting or causing to be solicited any customer of the Company that was a customer of the Company in the Restricted Area during the period when Executive was employed by the Company; and

(c) refrain from, and cause Executive’s affiliates to refrain from, engaging or employing or soliciting or contacting with a view to the engagement or employment of, any person who is an officer or employee of the Company.

7.2 Exception for Equity Ownership. Notwithstanding the restrictions contained in Section 7.1, Executive or any of Executive’s affiliates may own (a) less than five percent (5%) of any equity security registered under the Exchange Act, in any entity engaged in the Business, provided that neither Executive nor Executive’s affiliates has the power, directly or indirectly, to control or direct the management or affairs of any such entity and is not involved in the management of such entity, and (b) those equity investments owned by Executive as of the date of this Agreement as previously disclosed in writing to and agreed by the Board.

7.3 Exception Within Certain States. Notwithstanding the restrictions contained in Section 7.1, within those areas of the State of Oklahoma that are within the Restricted Area (the “Oklahoma Restricted Area”), the restrictions in Sections 7.1(a) and 7.1(b) shall not apply after Executive’s employment with the Company has ended but before the Prohibited Period has expired; provided, however, that at no point during the Prohibited Period shall Executive, within the Oklahoma Restricted Area, solicit goods, services or a combination of goods and services from any established customer of the Company. Further, within those areas of the States of California or North Dakota that are within the Restricted Area, the restrictions contained in Section 7.1(a) and Section 7.1(b) shall not apply following the date that Executive is no longer employed by the Company and, during such period, Section 7.1(c) shall be applied within the States of California and North Dakota only to prohibit Executive from, directly or indirectly, soliciting or contacting with a view to the engagement or employment of, any person who is an officer or employee of the Company or otherwise directly or indirectly interfering with or raiding the Company’s employees.

# SURVIVAL OF COVENANTS, ENFORCEMENT OF COVENANTS AND REMEDIES

8.1 Survival of Covenants. Executive acknowledges and agrees that Executive’s covenants in Articles V, VI and VII, and those provisions necessary to interpret and enforce them, shall survive the termination of this Agreement, and the existence of any claim or cause


类别	年初余额

账面余额	坏账准备	账面价值

金额	比例
（%）	金额	计提比例
（%）

按信用风险特征组合计提坏账准
备的其他应收款	81,177.00	100.00			81,177.00

其中：低风险组合	81,177.00	100.00			81,177.00

账龄分析组合

单项金额不重大但单独计提坏账
准备的其他应收款

合计	81,177.00	100.00			81,177.00

# ②其他应收款按款项性质分类情况


Figure 5. Observed spectral energy distribution of GRB 160625B (points) at late times, interpolated as necessary to the indicated dates, and the best fits given by boxfit (lines) at indicated participation fraction \( \xi \), using an constant CBM density profile. Data denoted by grey points are ignored in the fitting (see text).

with spectra produced by boxfit at these epochs. The power-law slope of the SED, \( \beta \), between the optical (r) and X-ray (5 keV) bands, steepens slightly over time, from −0.79 ± 0.02 between 3 and 10 d to −0.86 ± 0.04 at 141 d. This is steeper than −0.65, expected from \( p \approx \) 2.3 implied by the early optical and X-ray light curves (see Section 4.2.1) for \( \nu < \nu _ { c } \), but shallower than−1.15, which is expected for \( \nu > \nu _ { c } \). Alexander et al. (2017) obtain an early X-ray spectral slope similar to this, \( \beta _ { X } = - 0 . 8 6 _ { - 0 . 1 0 } ^ { + 0 . 0 9 } \), and explain this as \( \nu _ { c } \) being lo-catedj ust below the X-ray band. However, according to the UKSSDC Swift Burst Analyser11 the X-ray pho-ton index \( \Gamma _ { X } \) (and thus the spectral slope in X-ray) does not significantly evolve over the first 30 d but stays around ∼ 1.8, after which the spectrum seems to flatten to \( \Gamma _ { X } \sim \)\( 1 . 1 \). This feature may not be real, though, as the Burst Analyzer light curve deviates much more from a clean power law when this is used in flux calculation– thus we assume a constant \( \Gamma _ { X } \) 12. If \( \nu _ { c } \) was initially just below X-ray and changed as \( \nu _ { c } \propto t ^ { - 1 / 2 } \), one would expect the spectrum to instead steepen over time to its \( \nu \gg \nu _ { c } \) value. We discuss this evolution further in Sec-tion 4.2.1.

Figure 6. Observed F160W (extinction-corrected), X-ray and interpolated 6 and 9 GHz light curves of the afterglow of GRB 160509A (points) and our power law fits including the broken power laws described by Eq. 1 (lines). The red triangle is the upper limit of the F160W flux at 24.8 d. X-ray flux densities from Swift/XRT (solid triangles) and Chan-dra/ACIS-S (open triangles) are reported at 5 keV. Both choices of \( \omega \) fit the late light curve equally well. The early light curve exhibits a shallower decay and another break, and thus points before \( 4 \times 1 0 ^ { 4 } \) s (grey) are ignored.

It was noted in Laskar et al. (2016) that the host galaxy of GRB 160509A contributes substantially to the

11 http://www.swift.ac.uk/burst analyser/00020667/12 The post-break X-ray slope would not change by changing \( \Gamma _ { x } \) at the latest Swift points, as Chandra points would be affected equally – but \( t _ { j , \mathrm { X } } \) could be delayed.

optical and infrared photometry, and that the event oc-curred behind a significant amount of extinction in the host galaxy. In order to estimate the host galaxy extinc-tion along the line of sight to the GRB, we removed the foreground Galactic reddening of \( E ( B - V ) \) = 0.2519 mag (Schlafly & Finkbeiner 2011) using the Cardelli et al. (1989) law, and assumed a \( f _ { \nu } \propto \nu ^ { \beta } \) SED, where \( \beta = - \) 0.6 (consistent with \( \nu < \nu _ { c } \) and \( p \approx \) 2.2, deter-mined based on the X-ray spectrum and light curve by Laskar et al. 2016). For the host, we assume the Pei (1992) extinction law for the Small Magellanic Cloud (SMC), as both Kann et al. (2006) and Schady et al. (2012) found the extinction curve in the SMC consis-tent with their samples. We fitted the observed optical-infrared SED simultaneously at two epochs, corrected using this extinction curve, to find the required extinc-tion correction to match \( \beta = - \) 0.6. The GRB flux in the \( g ^ { \prime } \) band at 1 d was estimated by subtracting the observed flux at 28 d (\( g ^ { \prime } = 2 5 . 3 9 \pm \) 0.12; Laskar et al. 2016) from the flux at 1.0 d \( ( g ^ { \prime } = 2 5 . 0 3 \pm \) 0.15; Cenko et al. 2016). The host is assumed to dominate at 28 d due to the flatness of the light curve even after the X-ray break. In the J band, we subtracted the flux of the host galaxy measured in the HST F110W filter (using a 1 arcsec aperture) from the flux at 1.2 d (\( J \approx \) 19.7;Tanvir et al. 2016). The \( r ^ { \prime } \) band was not included in the SED, as the late and early fluxes are consistent within 1 \( \sigma \) (Cenko et al. 2016; Laskar et al. 2016). Our F110W and F160W observations at 35.3 d made up the other epoch to be fitted simultaneously. The resulting host extinction is \( A _ { V } = 2 . 8 \pm 0 . 1 \) mag in the rest-frame (this is somewhat lower than the result obtained by Laskar et al. 2016, using an afterglow model fit where the host flux was a free parameter). Using the Pei (1992) law, the extinction correction in F160W (approximately i-band in the rest frame) is thus 1.5 mag. In the Milky Way, the adopted \( N _ { \mathrm { H , i n t } } = 1 . 5 2 \times 1 0 ^ { 2 2 } \) \( \mathrm { c m ^ { - 2 } } \) would cor-¨respond to \( A _ { V } \approx 6 . 9 \) mag (G¨uver & Ozel2009), sug-gesting a low \( A _ { V } / N _ { H } \) ratio for Milky Way standards but higher than that of most GRB hosts. This ratio is consistent with the \( A _ { V } \) vs. \( N _ { H } / A _ { V } \) relation in Kr¨uhler et al. (2011). As in the case of GRB 160625B, we com-bined our Chandra data of GRB 160509A with the data from the Swift/XRT light curve repository converted to 5 keV flux densities.

The CIRCE H-band fluxes were converted to the nar-rower F160W filter assuming \( \beta \, = \, - \) 0.6. The F160W and X-ray data and our power-law fits are presented in Figure 6, and the parameters of the fits are listed in Table 7. For our power law fits we ignore the data points before \( \sim | \)\( \mathbf { i } \cdot \mathbf { j } \) 5 d \( ( 4 \times 1 0 ^ { 4 } \) s), as the early X-ray light curve may contain a plateau and/or a flare; see Figure Table 7. Parameters of the best smooth broken power law fits to the GRB 160509A X-ray light curve.

6. In this case the smooth- and sharp-break scenarios give similar results: the best fit for the post-break de-cline for \( \omega \) = 3 is \( \alpha _ { 2 , \mathrm { X } } = - 1 . 9 8 \pm 0 . 1 0 \) and for \( \omega \) = 10,\( \alpha _ { 2 , \mathrm { X } } \, = \, - 1 . 9 6 \pm 0 . 0 9 \). Thej et-break times, 3.2 \( \pm \) 0.9 d and 3.7 \( \pm \) 0.8 d, respectively, are consistent with each other as well.

In the radio, we obtained the fluxes at 6 and 9 GHz at the epochs earlier than 79.9 d by power-law interpolation between observed fluxes – our measurements at 36.9 d and those published in Laskar et al. (2016) at earlier times. We then fitted a single power law to the points where the reverse shock should no longer dominate the radio flux (i.e. \( \geq \) 10 days; Laskar et al. 2016). The resulting decline slopes are \( \alpha _ { \mathrm { 6 G H z } } \, = \, - 0 . 9 1 \pm 0 . 1 1 \) and \( \alpha _ { 9 \mathrm { G H z } } = - 0 . 9 2 \pm 0 . 1 3 \). Since the reverse shock may still be contributing a non-negligible fraction of the flux at 10 d, we also performed the fit without this epoch. The results are consistent but less constraining: \( \alpha _ { \mathrm { 6 G H z } } = \)−1.07 ± 0.18 and \( \alpha _ { 9 \mathrm { { G H z } } } \; = \; - 0 . 9 2 \pm 0 . 2 1 \). The slopes at other frequencies between 5 and 16 GHz, fitted from 10 to 20 d, are all consistent with these, ranging from−0.80 ± 0.10 (7.4 GHz) to −1.02 ± 0.04 (8.5 GHz). In F160W and/or H, we only have two points and an upper limit; therefore we simply measure the decline assuming a single power law. As the first point at 5.8 d is after thej et break time we obtained from the X-ray fit, there should be no significant deviation from a single power law. The measured decline is \( \alpha _ { 2 , \mathrm { F 1 6 0 W } } = - 2 . 0 9 \pm 0 . 1 0 \), consistent within 1 \( \sigma \) with the X-ray decline.

Using boxfit, we again fitted the light curve at three different values of \( \xi \): 1, 0.1 and 0.01. As with the power-law fits, the X-ray points before 0.6 d were ignored, since boxfit cannot accommodate continuous energy injec-tion. Radio points with a significant reverse shock con-tribution were also ignored (i.e. \( < \) 10 d; at frequencies \( < \) 5 GHz also 10.03 d; see Laskar et al. 2016). We ran boxfit with the boosted-frame wind-like CBM model (with both strong and medium boost) and a lab-frame model with ISM-like CBM, as the lack of optical data makes it difficult to distinguish between different CBM profiles (although the ISM scenario is tentatively favored by Laskar et al. 2016). However, as shown in Figure 7, our fits in a wind CBM do not reproduce thej et break


Location
地點	Stage of
comlpetion
完工狀況	Expected
comlpetion date
預計完工日期	Site area/Gross
floor area
佔地面積╱
建築面積	Type of use
用途	Gr’oups
interest
集團權益

PROPERTIES HELD FOR DEVELOPMENT: (Continued)
持有作發展物業：（續）

A parcel of land in Tie Ji Village,
Hong Shan District, Wuhan,
The Peol’es Reblhppuic of Cina
中華人民共和國
武漢市洪山區
鐵機村之一塊土地	Under
construction
建造中	December 2022
(Phase VI)
二零二二年十二月
（第六期）	390,000 sq.m./
1,731,000 sq.m.
390,000平方米╱
1,731,000平方米	Office/
Commercial/
Residential
辦公室╱
商業╱住宅	68%

A parcel of land in Ma Chi Lu,
Dong Xi Hu District, Wuhan,
The Peol’es Reblhppuic of Cina
中華人民共和國
武漢市東西湖區
馬池路之一塊土地	Under
construction
建造中	June 2021
二零二一年六月	59,000 sq.m./
297,000 sq.m.
59,000平方米╱
297,000平方米	Commercial/
Residential
商業╱住宅	55%

Four parcels of land
in Tu Hu Cun Xia Liao, Danshui,
Huiyang District, Huizhou,
Guandgong Province,
The Peol’blipes Repuc of China
中華人民共和國
廣東省惠州市
惠陽區淡水
土湖村下寮地段之
四塊土地	Under
construction
建造中	January 2022
(Phase IV)
二零二二年一月
（第四期）	187,000 sq.m./
863,000 sq.m.
187,000平方米╱
863,000平方米	Residential
住宅	70%

A parcel of land at east of
Cheng Dong Lu and South of
Tan Jia Ling Dong Lu,
Li Zhou Jie Dao,
Yu Yao County,
Zhejiang Province,
The Peol’es Reblhppuic of Cina
中華人民共和國
浙江省
余姚市
梨洲街道
城東路以東及譚家岭東路以南之
一塊土地	Under
construction
建造中	June 2018
二零一八年六月	208,000 sq.m./
622,000 sq.m.
208,000平方米╱
622,000平方米	Commercial/
Residential
商業╱住宅	100%

Location
地點	Stage of
comlpetion
完工狀況	Expected
comlpetion date
預計完工日期	Site area/Gross
floor area
佔地面積╱
建築面積	Type of use
用途	Gr’oups
interest
集團權益

PROPERTIES HELD FOR DEVELOPMENT: (Continued)
持有作發展物業：（續）

Four parcels of land
in Bei Da Huai Shu reigon,
HuaiiDiyn strict,
Jinan, Shandong Province,
The P’eolpes Relihipubc of Cna
中華人民共和國
山東省濟南市
槐蔭區北大槐樹片區之
四塊土地	Under
construction
建造中	October 2019
二零一九年十月	89,000 sq.m./
502,000 sq.m.
89,000平方米╱
502,000平方米	Commercial/
Residential
商業╱住宅	85%

A parcel of land at south of
Hua Yuan Lu,
east of Hua Xian Chang Lu, Lixia District,
Jinan, Shandong Province,
The Peol’es Reblhppuic of Cina
中華人民共和國
山東省濟南市
歷下區
花園路南側
化纖廠路東側之
一塊土地	Under
construction
建造中	October 2018
二零一八年十月	112,000 sq.m./
419,000 sq.m.
112,000平方米╱
419,000平方米	Residential
住宅	80%

Four parcels of land at east of Hua Xi Da Dao,
Nan Ming District,
Guiyang, Guizhou Province,
The Peol’es Reblhppuic of Cina
中華人民共和國
貴州省貴陽市
南明區花溪大道東側
之四塊土地	Under
construction
建造中	May 2021
二零二一年五月	248,000 sq.m./
1,566,000 sq.m.
248,000平方米╱
1,566,000平方米	Commercial/
Residential
商業╱住宅	51%


“Main Board”	the stock exchange (excluding the option market)
operated by the Stock Exchange which is independent
from and operated in parallel with the Growth Enterprise
Market of the Stock Exchange. For the avoidance of
doubt, the Main Board excludes the Growth Enterprise
Market

“Memorandum” or
“Memorandum of Association”	the eihhdgt amende and restated memorandum of
association of the Company adopted by special resolution
on October 8, 2019 with effect from Listing, as amended
from time to time, a summary of which is set out in the
section headed “Appendix IV – Summary of the
Constitution of the Company and Cayman Companies
Law”

“MOFCOM”	the Ministry of Commerce of the PRC (中華人民共和國
商務部)

“NDRC”	the National Development and Reform Commission (國
家發展和改革委員會)

“NMPA”	National Medical Products Administration (國家藥品監
督管理局) and its predecessor, the China Food and Drug
Administration (國家食品藥品監督管理總局)

“Nomination Committee”	 the nomination committee of the Board

“Ocean Prominent”	Ocean Prominent Limited (越揚有限公司), a limited
liability company incorporated in the BVI on March 18,
2014, and one of the Com’pans subsidiyaries

“Offer Price”	the final Hong Kong dollar price per Offer Share (before
brokerage of 1%, SFC transaction levy of 0.0027% and
Stock Exchange trading fee of 0.005%) at which Shares
are to be subscribed or purchased pursuant to the Global
Offering, which will be not more than HK$8.95 and is
expected to be not less than HK$8.18, to be determined as
described in “Structure of the Global Offering – (E)
Pricing of the Global Offering” in this prospectus

“Offer Share(s)”	the Hong Kong Offer Shares and the International
Offering Shares, where relevant, with any Shares being
issued pursuant to the exercise of the Over-allotment
Option

“Over-allotment Option”	the option to be granted by our Company to the Joint
Global Coordinators (on behalf of the International
Underwriters) under the International Underwriting
Agreement pursuant to which our Company may be
required by the Joint Global Coordinators to allot and
issue up to 37,548,000 additional Shares, representing
approximately 15% of the Offer Shares initially available
under the Global Offering, at the Offer Price to cover
over-allocations in the International Offering, details of
which are described in the section headed “Structure of
the Global Offering” in this prospectus

“Over-allotment Shares”	up to 37,548,000 Shares which our Company may be
required to issue at the Offer Price pursuant to the
Over-allotment Option

“PRC Legal Advisor”	Commerce & Finance Law Offices

“Pre-IPO Incentivisation Plans”	 the 2015 Pre-IPO Incentivisation Plan, the 2016 Pre-IPO
Incentivisation Plan and the 2018 Pre-IPO Incentivisation
Plan, the principal terms of which are set out in the
section headed “Appendix V – Statutory and General
Information – Pre-IPO Incentivisation Plans”

“Pre-IPO Investments”	the subscription of 55,500,000 Series A Preferred Shares,
125,976,000 Series B Preferred Shares, 145,506,500
Series C Preferred Shares, and 205,262,271 Series D
Preferred Shares by the Pre-IPO Investors at an aggregate
consideration of approximately US$244 million pursuant
to the Series A and B Share Purchase Agreement, Series
B Agreements, Series C Share Purchase Agreement,
Series D1 Share Purchase Agreement and Series D2
Share Purchase Agreement, further information on which
is set forth in the section headed “History, Development
and Corporate Structure – Pre-IPO Investment” in this
prospectus

“Pre-IPO Investors”	the Series A Preferred Shareholder, the Series B Preferred
Shareholders, the Series C Preferred Shareholders and the
Series D Preferred Shareholders


Impairment assessment of intangible assets, construction in progress (“CIP”) and property, plant
and equipment (“PP&E”) of Full Gold

Refer to notes 14, 15, 16 to the consolidated financial statements and the accounting policies on page
80.

The Key Audit Matter	How the matter was addressed in our audit

Due to the increasing uncertainty about the
operational environment of a cash-generating unit
(“CGU”), Full Gold Mining Limited Liability
Company (“Full Gold”), a subsidiary of the Group,
which incorporated in and has operations in the
Kyrgyz Republic, there is a risk that the value of
the intangible assets, CIP and PP&E of Full Gold
may not be recoverable in full through the future
cash flows to be generated from its mining
operations or from disposal of these assets.
Full Gold held intangible assets (excluding
exploration and evaluation assets) totalling RMB96
million, CIP totalling RMB9 million and PP&E
totalling RMB178 million as at 31 December 2020.
The recoverable amount of the cash generating
unit which included Full Gold was determined by
management as the greater of the value in use
and the fair value less cost of disposal of the
assets of Full Gold. A discounted cash flow
forecast was prepared by management to
determine the value in use.
We identified the impairment assessment of the
intangible assets, CIP and PP&E of Full Gold as a
key audit matter because the impairment
assessment prepared by management is complex
and contains certain judgements and assumptions,
particularly in relation to future gold prices, the
long-term growth rate and the discount rate
applied, which are inherently uncertain and may be
subject to management bias.	Our audit procedures to assess potential impairment of
the intangible assets, CIP and PP&E of Full Gold
included the following:
•    engaging our internal valuation specialists to assist
us in evaluating the methodology used by
management in the preparation of the discounted
cash flow forecast with reference to the
requirements of the prevailing accounting
standards;
•   comparing the future gold prices used in the
discounted cashflow forecast with gold futures
contract prices in the market;
•   comparing data in the discounted cashflow forecast
with the relevant data, including future revenue,
future cost of sales and future other operating
expenses, in the budget which was approved by
the Board of Directors;
•   comparing the revenue and operating costs
included in discounted cashflow forecast prepared
in the prior year with the current year’s
performance of Full Gold to assess how accurate
the prior year’s discounted cashflow forecast was
and making enquiries of management as to the
reasons for any significant variations identified;
•   with the assistance of our internal valuation
specialists, assessing whether the discount rate
applied in the discounted cashflow forecast was
within the range adopted by other companies in
the same industry;

Impairment assessment of intangible assets, construction in progress (“CIP”) and property, plant
and equipment (“PP&E”) of Full Gold

Refer to notes 14, 15, 16 to the consolidated financial statements and the accounting policies on page
80.

The Key Audit Matter	How the matter was addressed in our audit

	•   comparing the long-term growth rate adopted in
the discounted cashflow forecast with those of
comparable companies and external market data;
and
•   obtaining from management sensitivity analyses of
the key assumptions, including future gold prices,
future production quantities and future gross profit
margins, adopted in the discounted cashflow
forecast prepared by management and assessing
the impact of changes in the key assumptions to
the conclusions reached in the impairment
assessments and whether there were any
indicators of management bias.

# INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR’S REPORT THEREON

The Directors are responsible for the other information. The other information comprises all the information included in the annual report, other than the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.


	Notes
附註	2016
二零一六年	2015
二零一五年

HK$’000
千港元	HK$’000
千港元

Non-current assets          非流動資產

Plant and equipment         廠房及設備	19	4,391	15,291

Interests in associates        於聯營公司權益	22	6,129	28,807

Interests in joint ventures       於合營企業權益	23	212,525	221,623

Deposits paid             已付按金	21	–	20,000

Contingent consideration receivable 應收或然代價	24	–	4,731

		223,045	290,452

Current assets            流動資產

Inventories              存貨	25	1,262	3,290

Trade and other receivables     貿易及其他應收款項	26	36,085	42,243

Deposits paid             已付按金	21	20,000	–

Held-for-trading investments     持作買賣投資	28	411	–

Bank balances and cash       銀行結餘及現金	29	2,388	2,547

		60,146	48,080

Current liabilities           流動負債

Trade and other payables       貿易及其他應付款項	30	117,835	96,762

Other borrowings           其他借貸	31	70,500	69,200

Obligations under finance      融資租賃承擔

leases – current portion       －即期部分	32	569	611

Convertible bonds          可換股債券	33	97,781	325,307

Derivative financial liability      衍生金融負債	27	–	17,785

		286,685	509,665

Net current liabilities        流動負債淨額		(226,539)	(461,585)

Total assets less current liabilities 總資產減流動負債		(3,494)	(171,133)

Non-current liabilities        非流動負債

Obligations under finance      融資租賃承擔

leases – non-current portion     －非即期部分	32	870	1,585

Promissory notes payable       應付承兌票據	34	–	18,925

Deferred income           遞延收入	40	–	127

		870	20,637

Net liabilities             負債淨值		(4,364)	(191,770)

	Notes
附註	2016
二零一六年	2015
二零一五年

HK$’000
千港元	HK$’000
千港元

Cailpta and reserves         資本及儲備

Share cailpta             股本	35	52,836	5,284

Reserves                儲備		(54,642)	(195,659)

Equity attributable to owners     本公司擁有人應佔權益
of the Company		(1,806)	(190,375)

Non-controlling interests       非控股權益		(2,558)	(1,395)

Total deficits             總虧絀		(4,364)	(191,770)

The consolidated financial statements on pages 96 to 238 were approved and authorised for issue by the board of directors on 27 March 2017 and are signed on its behalf by:

第96至238頁之綜合財務報表已於二零一七年三月二十七獲董事會批准及授權刊發，並由下列人士代表簽署︰

Yu Sau Lai
余秀麗	Lam Raymond Shiu Cheung
林兆昌

Director
董事	Director
董事


We are a diversified IPP in Asia in terms of fuel type and geography, with a portfolio of gas-fired, coal-fired, oil-fired, hydro, cogen and fuel cell power generation projects and a steam project in the PRC and Korea. As of April 30, 2014, our clean and renewable energy projects, namely gas-fired, hydro and fuel cell projects, accounted for approximately 51.6% of our attributable installed capacity, and our conventional power projects, namely coal fired, oil-fired and cogen projects, accounted for approximately 48.4% of our attributable installed capacity. For the four months ended April 30, 2014, our clean and renewable energy projects contributed 71.0% of our revenue and our conventional energy and steam projects contributed 29.0% of our revenue. In addition, on August 20, 2014 and September 15, 2014, we entered into separate Operation and Management Services Framework Agreements with CGN Energy and Huamei Holding, respectively, which outline the terms of the management services we provide to hydro (including pumped storage), coal-fired, cogen and wind power projects in which the CGN Energy and Huamei Holding have interests (including the Disposal Group).

As of April 30, 2014, we had 14 operating power generation projects with a consolidated installed capacity of 2,867.8 MW and an attributable installed capacity of 3,659.5 MW and one steam project in our portfolio. For the years ended December 31, 2011, 2012 and 2013 and for the four months ended April 30, 2014, our net electricity generated amounted to 5,618 GWh, 6,225 GWh, 7,116 GWh and 2,020 GWh, respectively. As of the Latest Practicable Date, one power generation project is under construction and is expected to contribute an additional attributable installed capacity of 18.0 MW to our power project portfolio by the end of 2014. In addition, our business includes providing management services to power projects owned by CGN. We provide management services to 23 operating power generation projects in which CGN Energy and Huamei Holding have interests with an attributable installed capacity of 5,831.6 MW, three of which are under expansion, which together with an additional four power generation projects that are either under construction or will commence construction, are expected to contribute an additional attributable installed capacity of 454.9 MW to projects under management between 2014 and 2018. We also provide management services to XTI, an investment holding company holding some of the above mentioned projects in which Huamei Holding has interests.

We focus on acquiring clean and renewable power generation projects while continuing our own greenfield and brownfield developments to deliver solid returns and create shareholder value. Positioned as CGN’s sole global platform for development and operation of non-nuclear clean and renewable power generation projects, we intend to selectively acquire clean and renewable power generation projects with solid returns from CGN with an aggregate installed capacity of 3.0 GW to 5.0 GW in several batches within the next four years by exercising our acquisition rights under the non-competition deed given by CGN in our favor. We intend to undertake the first batch of acquisition before the end of 2015 and other batches from 2015 to 2018, subject to compliance with applicable regulatory requirements and the Listing Rules. For additional details, see “Relationship with CGN Group” and “Business – Power Project Pipeline”.

For the years ended December 31, 2011, 2012 and 2013 and for the four months ended April 30, 2014, our revenue was U.S.\$754.7 million U.S.\$932.4 million, U.S.\$1,037.3 million and U.S.\$311.2 million, respectively, and our profit for the year/period attributable to the owner of our Company was U.S.\$11.3 million, U.S.\$29.0 million, U.S.\$55.3 million and U.S.\$15.8 million, respectively.

Since our Company’s establishment in 1995, we have grown significantly in the PRC and Korea and intend to continue this growth through additional development and acquisitions. Our pipeline comprises the proposed acquisition of a wind project in the PRC as well as clean and renewable energy

projects for which we are currently in preliminary stages of negotiations. For details of our power projects in operation, under construction and in our pipeline, see “Business – Our Power Projects in Operation,” “Business – Our Power Projects in the PRC,” “Business – Our Power Projects in Korea,” “Business – Our Power Projects Under Construction/Expansion” and “Business – Power Project Pipeline”.

# KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Our results of operations, financial condition and future prospects have been and will continue to be, affected by a number of factors, including those set out below.

Our non-renewable energy power projects require supplies of coal, oil and gas as fuel. Fuel costs represent a significant portion of our operating expenses and the operating expenses of our associates. The amount of our fuel costs corresponded to 69.3%, 73.2%, 71.0% and 66.1% of our revenue for the years ended December 31, 2011, 2012 and 2013 and for the four months ended April 30, 2014, respectively, and 57.8%, 56.7%, 48.6% and 39.7% of the revenue of our associates for the years ended December 31, 2011, 2012 and 2013 and for the four months ended April 30, 2014, respectively. The extent to which our profit is ultimately affected by the cost of fuel depends on our ability to pass through fuel costs to our customers as set out under the relevant regulatory guidelines and the terms of our PPA for a particular project, as we currently do not hedge our exposure to fuel price fluctuations. Our fuel costs are also affected by the volume of electricity generated because the coal consumption rate of coal-fired and cogen power projects decrease when we generate more electricity as a result of economies of scale. In the PRC, government tariff regulations limit our ability to pass through changes in fuel costs. For a discussion of PRC tariff regulations, see “– Tariffs” and “Appendix V – Summary of Principal Legal and Regulatory Provisions in the PRC and Korea – PRC Regulatory Overview –Business Operation – On-grid tariffs” and “Appendix V – Summary of Principal Legal and Regulatory Provisions in the PRC and Korea”. In Korea, however, the Yulchon I Power Project PPA allows us to contractually incorporate fuel cost fluctuations in the tariff charged to our customer. See “Business –Our business – Offtake arrangements”. In addition, any shortage of fuel supply for a particular power project may decrease our utilization hours, and as a result, our net generation and results of operations.

The following table sets out the weighted average gas and standard coal and average oil prices applicable to our projects in the PRC and Korea, exclusive of VAT for the periods indicated:

	For the year ended December 31,	For the four months
ended April 30,

2011	2012	2013	2013	2014

PRC weihdgte average gas price
3((1)(2)(3)RMB   perNm)........	1.786	1.859	1.861	1.813	2.048

PRC weihdgte average standard coal
price (RMB per ton)(1) ........	992	905	757	810	729

Korea weihdgte average gas price
3((1)(4)KRW   perNm)..........	723	802	797	807	864

Korea average oil price (KRW per
Liter)(5) .................	1,345	1,640	1,499	1,535	1,456


income tax rate (25%), except for the enterprises which enjoy preferential tax treatments. According to the Notice on Transition Preferential Treatment Policy Relating to Implementation of Enterprise Income Tax which become effective on January 1, 2008, for enterprises that originally enjoyed a preferential tax treatment with fixed periods of exemptions and reductions, such as “Two years of exemption, Three years of reduction by 50%” and “Five years of exemption, Five years of reduction by 50%”, they shall continue to enjoy these preferential treatments and terms under the original tax levy law, administrative regulations and regulations even upon implementation of the Enterprise Income Tax Law until the expiration of such treatments. However, for enterprises which have yet to see profits and hence been unable to enjoy the preferential tax treatment, the preferential period for them will start to calculate from the year 2008.

On April 11, 2008, the State Administration of Taxation issued a Notice on the Payment of Income Tax of Property Development Enterprises . This Notice stipulated that for the enterprises which prepay the income tax on quarterly or monthly basis according to their yearly profit, the profit will be calculated from the pre-sale income and adjusted based on the actual profit after the completion of the property.

Under the PRC Interim Regulation on Business Tax of 1993, as amended in 2008, services in mainland China are subject to business tax. Taxable services include sale of real property in mainland China. Business tax rate is between 3% to 20% depending on the type of services provided. Sale of real properties and other improvements on the land attract a business tax at the rate of 5% of the turnover of the selling enterprise payable to the relevant local tax authorities.

Pursuant to the Notice of the SAT on Business Tax of the Land Use Right Reclaimed to the Land Owner issued on March 27, 2008 , when the land user returns the land use rights to the land owner, the business tax can be exempted.

On January 27, 2011, the Ministry of Finance and the State Administration of Taxation issued the Notice on Adjusting the Policy of Business Tax on Re-sale of Personal Residential Properties , which states that, business tax is imposed on the full amount of the sale income, upon the transfer a residence by an individual within five years from the purchase date. For the transfer of non-ordinary residence which is more than five years from the purchase date, the business tax is to be levied on the difference between the sale income and the purchase price. In the case of an ordinary residence, the business tax is exempted if that transfer occurs after five years from the purchase date. It also states that from January 27, 2011 Notice on Adjusting Policy of Business Tax on Re-sale of Personal Residential Properties issued on December 22, 2009 shall cease to be effective.

Under the PRC Interim Regulation on Land Appreciation Tax of 1993 and its implementing rules of 1995, LAT applies to both domestic and foreign investors in real properties

in mainland China, irrespective of whether they are corporate entities or individuals. The tax is payable by a taxpayer on the appreciation value derived from the transfer of land use rights, buildings or other facilities on such land, after deducting the “deductible items” that include the following:

• payment made to acquire land use rights;

• costs and charges incurred in connection with land development;

• construction costs and charges in the case of newly constructed buildings and facilities;

• assessed value in the case of old buildings and facilities;

• taxes paid or payable in connection with the transfer of land use rights, buildings or other facilities on such land; and

• other items allowed by the Ministry of Finance.

The tax rate is progressive and ranges from 30% to 60% of the appreciation value as compared to the “deductible items” as follows:

Appreciation value	LAT rate

Portion not exceeding 50% of deductible items . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30%

Portion over 50% but not more than 100% of deductible items . . . . . . . . . . . . . . . . . . .	40%

Portion over 100% but not more than 200% of deductible items . . . . . . . . . . . . . . . . . .	50%

Portion over 200% of deductible items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	60%

Exemption from LAT is available to the following cases:

• Taxpayers constructing ordinary residential properties for sale (i.e. the residences built in accordance with the local standard for general residential use, excluding deluxe apartments, villas, resorts etc.), where the appreciation amount does not exceed 20% of the sum of the deductible items;

• Real estate taken over and repossessed according to laws due to the construction requirements of the state;

• Due to redeployment of work or improvement of living standard, transfers by individuals of originally self-used residential properties, provided that the transferor has occupied the property as his or her residence for five years or longer and has obtained the relevant tax authority’s approvals.

According to the Notice on the Levy and Exemption of Land Appreciation Tax for Development and Transfer Contracts signed before January 1, 1994 issued by the Ministry of Finance and the State Administration of Taxation in January 1995, the LAT regulation does not apply to the following transfers of land use rights:

• real estate transfer contracts signed before January 1, 1994; and