The Directors of the Company during the year ended 31 December 2018 and up to the date of this report were:

Mr. Luo Canwen (Chief Executive Officer)

Pursuant to Article 84 of the Articles of Association of the Company, Mr. Luo Canwen, Mr. Chen Chunniu and Mr. Wu Chi Keung shall retire by rotation and, being eligible, will offer themselves for re-election at the forthcoming annual general meeting.

# BIOGRAPHIES OF DIRECTORS AND SENIOR MANAGEMENT

Biographical details of the Directors and senior management of the Group are set out on pages 9 to 11 of this annual report.

Details of the Directors’ emoluments are set out in note 11 to the consolidated financial statements.

No Director has waiver or has agreed to waive any emoluments and no emoluments were paid by the Group to the Directors as an inducement to join or upon joining the Group or as compensation for loss of office during the year ended 31 December 2018.

Each of the executive Directors has entered into a service contract with the Company for an initial fixed term of three years with effect from the Listing Date renewable automatically unless terminated by not less than three months’ notice in writing served by either the Director or the Company.

The non-executive Director has entered into a letter of appointment with the Company for an initial term of three years renewable automatically which unless otherwise terminated pursuant to the terms of the appointment is subject to automatic renewal. The appointment shall be subject to normal retirement and re-election at the annual general meeting by Shareholders of the Company pursuant to the Articles of Association.

Each of the independent non-executive Directors has entered into a letter of appointment with the Company with effect from the Listing Date subject to retirement by rotation and re-election at annual general meetings of our Company and until terminated by not less than three months’ notice in writing served by either the Company or the relevant Director.

Apart from the foregoing, no Director proposed for re-election at the forthcoming annual general meeting has a service contract which is not determinable by the Company or any of its subsidiaries within one year without payment of compensation, other than statutory compensation.

# CONFIRMATION FROM THE INDEPENDENT NON-EXECUTIVE DIRECTORS

The Company has received from each of the independent non-executive Directors the confirmation of their independence pursuant to rule 3.13 of the Listing Rules. Based on such confirmations, the Company considers each of the independent non-executive Directors is independent in accordance with rule 3.13 of the Listing Rules.

During the year ended 31 December 2018, the Group did not entered into any equity-linked agreement.

Prior to the Listing, the Company conditionally adopted a share option scheme (the “Scheme”) on 23 March 2016 which became effective and unconditional upon the Listing. The purpose of the Scheme is to enable the Company to grant options to the Eligible Persons (as defined below) as incentives or rewards for their contribution or potential contribution to the Group.

The primary purpose of the Scheme is to grant options as incentives or rewards to Eligible Persons for their contribution or potential contribution to the Group.

The Board may, at its discretion, offer to grant an option to subscribe for such number of new Shares as the Board may determine at an exercise price determined in accordance with paragraph (h) below to any full-time or part-time employee of the Company or any member of the Group, including any executive Director, non-executive Director and independent non-executive Director, and any supplier, customer, agent, advisor and consultant of our Group who, in the sole opinion of the Board, will contribute or have contributed to the Group (collectively, the “Eligible Persons”).

# c. Total number of Shares available for issue

The total number of Shares which may be issued upon exercise of all options to be granted under the Scheme and any other share option schemes of the Company must not exceed 60,000,000 Shares, representing 10% of the Company’s issued share capital upon Listing.


# 31. Notes to the Consolidated Statement of Cash Flows (continued)

The total cash outflow for leases included in the statement of cash flows is as follows:

	2020	2019

HK$’000	HK$’000

Within operating activities	17,353	15,713

Within financing activities	243,148	339,622

	260,501	355,335

At the end of the reporting period, contingent liabilities not provided for in the financial statements were as follows:

	2020	2019

HK$’000	HK$’000

Bank guarantees given in lieu of utility and property rental deposits	24,757	26,921

The Group had the following capital commitments at the end of the reporting period:

	2020	2019

HK$’000	HK$’000

Contracted, but not provided for:

Leasehold improvements, furniture, fixtures and equipment	17,550	30,010

# (A) In addition to the transactions and balances detailed elsewhere in these financial statements, the Group had the following transactions with related parties during the year:

	Notes	2020	2019

HK$’000	HK$’000

Rental expense to a related party	 (i)	–	36

Management fee from associates	 (ii)	–	660

Sales of food and other operating items to associates	 (iii)	–	4,620

(i) The rental expense to a related party, Madam Chan Sai Ying, who is the spouse of Mr. Chung Wai Ping, was charged based on mutually agreed terms at a monthly fixed amount of HK\$4,000 during the year ended 31 December 2019.

(ii) The management fee was charged to associates based on 1 to 2% of gross receipt during the year ended 31 December 2019.

(iii) Sales of food and other operating items to associates were charged based on mutually agreed terms and conditions.

# (B) Compensation of key management personnel of the Group

The compensation of key management personnel of the Group for each reporting period represented the directors’ emoluments as disclosed in note 8 to the financial statements.

The related party transaction mentioned in note (a)(i) above constitutes a continuing connected transaction as defined in Chapter 14A of the Listing Rules.


option (whether legally enforceable or not) to subscribe for or purchase, or to nominate persons to subscribe for or purchase, any Shares or any securities of any member of the Group.

Following the completion of the Global Offering, the Hong Kong Underwriters and their affiliated companies may hold a certain portion of the Shares as a result of fulfilling their respective obligations under the Hong Kong Underwriting Agreement.

In connection with the International Offering, the Company and the Controlling Shareholders expect to enter into the International Underwriting Agreement with the International Underwriters on the Price Determination Date. Under the International Underwriting Agreement and subject to the Over-allotment Option, the International Underwriters would, subject to certain conditions set out therein, agree severally but notj ointly to procure subscribers for, or themselves to subscribe for, their respective applicable proportions of the International Offer Shares initially being offered pursuant to the International Offering. It is expected that the International Underwriting Agreement may be terminated on similar grounds as the Hong Kong Underwriting Agreement. Potential investors should note that in the event that the International Underwriting Agreement is not entered into, the Global Offering will not proceed. Please see “Structure of the Global Offering—The International Offering.”

The Company is expected to grant to the International Underwriters the Over-allotment Option, exercisable by the Joint Global Coordinators on behalf of the International Underwriters at any time from the Listing Date until 30 days after the last day for lodging applications under the Hong Kong Public Offering, pursuant to which the Company may be required to issue up to an aggregate of 53,000,000 Shares, representing not more than 15% of the number of Offer Shares initially available under the Global Offering, at the Offer Price, to, among other things, cover over-allocations in the International Offering, if any. Please see “Structure of the Global Offering—Over-allotment Option.”

Each of our Company and the Controlling Shareholders has agreed to indemnify the Hong Kong Underwriters and International Underwriters for certain losses which they may suffer or incur, including losses arising from their performance of their obligations under the Underwriting Agreements and any breach by any of the Company and the Controlling Shareholders of the Hong Kong Underwriting Agreements.

The Underwriters will receive an underwriting commission of 2.5% of the aggregate Offer Price of all the Offer Shares (including any Offer Shares to be issued pursuant to the exercise of the Over-allotment Option), out of which they will pay any sub-underwriting commissions and other fees.

The Underwriters may receive a discretionary incentive fee of up to 1.0% of the aggregate Offer Price of all the Offer Shares (including any Offer Shares to be issued pursuant to the exercise of the Over-allotment Option).

For any unsubscribed Hong Kong Offer Shares reallocated to the International Offering, the underwriting commission will not be paid to the Hong Kong Underwriters but will instead be paid, at the rate applicable to the International Offering, to the relevant International Underwriters.

The aggregate underwriting commissions payable to the Underwriters in relation to the Global Offering (assuming an Offer Price of HK\$2.39 per Offer Share (which is the mid-point of the Offer Price range), the full payment of the discretionary incentive fee and the exercise of the Over-allotment Option in full) will be approximately HK\$34.0 million.

The aggregate underwriting commissions and fees together with the Stock Exchange listing fees, the SFC transaction levy and the Stock Exchange trading fee, legal and other professional fees and printing and all other expenses relating to the Global Offering are estimated to be approximately HK\$91.6 million (assuming an Offer Price of HK\$2.39 per Offer Share (which is the mid-point of the Offer Price range), the full payment of the discretionary incentive fee and the exercise of the Over-allotment Option in full) and will be paid by our Company.

# Hong Kong Underwriters’ Interests in our Company

Save as disclosed in this prospectus and save for its obligations under the Hong Kong Underwriting Agreement, the Hong Kong Underwriters do not have any shareholding interests in our Company or the right or option (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in our Company.

Following the completion of the Global Offering, the Underwriters and their affiliated companies may hold a certain portion of the Shares as a result of fulfilling their obligations under the Underwriting Agreements.

The Joint Global Coordinators and the Underwriters or its respective affiliates have, from time to time, provided and expect to provide in the future investment banking and other services to our Company and our respective affiliates, for which such Joint Global Coordinators and the Underwriters or their respective affiliates have received or will receive customary fees and commissions

The Joint Sponsors satisfy the independence criteria applicable to sponsors set out in Rule 3A.07 of the Listing Rules.

The underwriters of the Hong Kong Public Offering and the International Offering (together, the “Syndicate Members”) and their affiliates may each individually undertake a variety of activities (as further described below) which do not form part of the underwriting or stabilizing process.


Using [5, Proposition 6.6], if \( \sigma _ { x } \) can be obtained as a truncated induction (see [9, Chapter 11])from the sign representation of a Weyl subgroup \( W ^ { \prime } \leq W \), i.e. \( \sigma _ { x } = j _ { W ^ { \prime } } ^ { W } ( \mathrm { s g n } ) \), then we can reduce this formula into

\[ R _ { x } : = \sum _ { w ^ { \prime } \in W ^ { \prime } } ( - 1 ) ^ { l ( w ^ { \prime } ) } X \left( \begin{array} { c } { { \lambda _ { \mathcal { O } } } } \\ { { w ^ { \prime } \lambda _ { \mathcal { O } } } } \end{array} \right) . \]

Step (4) Consequently, every unipotent representation corresponding to \( \mathcal { O } \) is parametrized by \( \pi \in \overline { { A } } ( \mathcal { O } ) ^ { \wedge } \), and has the character formula

\[ X _ { \pi } : = \frac { 1 } { | \overline { { A } } ( \mathcal { O } ) | } \sum _ { x \in \overline { { A } } ( \mathcal { O } ) } t r ( \pi ( x ) ) R _ { x } . \]

Example 3.2. We now study the special unipotent representations attached to the orbit \( \mathcal { O } = ( 2 ^ { 2 p } 1 ^ { 2 q } ) \):

– The Lusztig-Spaltenstein dual is given by \( { \cal L } { \cal O } = ( 2 p + 2 q + 1 , 2 p - 1 , 1 ) \). Hence

\[ \gamma ( \mathcal { O } ) : = \{ \mathcal { O } ^ { \prime } \subseteq \overline { { \mathcal { O } } } | \mathcal { O } ^ { \prime } \not \subseteq \overline { { \mathcal { O } } } _ { s p e c } \mathrm { ~ f o r ~ a n y ~ o t h e r ~ s p e c i a l ~ o r b i t ~ } \mathcal { O } _ { s p e c } \subseteq \mathcal { O } \} \hookrightarrow \overline { { A } } ( \mathcal { O } ) . \]

Consider the following composition of maps:

\[ \mathcal { O } ^ { \prime } \in \gamma ( \mathcal { O } ) \hookrightarrow x ( \mathcal { O } ^ { \prime } ) \in \overline { { A } } ( \mathcal { O } ) \overset { S t e p ( 2 ) } { \longmapsto } \sigma _ { x ( \mathcal { O } ^ { \prime } ) } \in \hat { W } . \]

Then \( \sigma _ { x ( \mathcal { O } ^ { \prime } ) } = s p ( \mathcal { O } ^ { \prime } ) \), the Springer representation of \( \mathcal { O } ^ { \prime } \).

For \( \mathcal { O } = ( 2 ^ { 2 p } 1 ^ { 2 q } ) \), \( \gamma ( O ) = \{ O , { \mathcal { O } } ^ { \prime } \} \), where \( \mathcal { O } ^ { \prime } = ( 2 ^ { 2 p - 1 } 1 ^ { 2 q + 2 } ) \), and \( A ( \mathcal { O } ) = \overline { { A } } ( \mathcal { O } ) = \mathbb { Z } / 2 \mathbb { Z } = \)\( \{ e , s \} \) with e being the identity element. So the injection above is indeed a bijection, and

\[ \mathcal { O } \leftrightarrow e \; ; \; \; \mathcal { O } ^ { \prime } \leftrightarrow s . \]

According to the algorithm of computing Springer representations given in Section 7 of[24],

– The two reduced formula is of the form

(Here we have used Remark (a) after Proposition 1.4.)

– The two special unipotent representations are of the form

We now link the special unipotent representations obtained in the previous example with \( \theta ( \mathrm { t r i v } ) \),\( \theta ( \mathrm { d e t } ) \).

Proposition 3.3. As \( ( { \mathfrak { g } } _ { \mathbb { C } } , K _ { \mathbb { C } } ) \cdot \)-modules,

\[ X _ { \mathcal { O } } ^ { + } \cong \theta ( \mathrm { t r i v } ) , ~ X _ { \mathcal { O } } ^ { - } \cong \theta ( \mathrm { d e t } ) \]

Proof. The proposition can be proved directly by tracing along the lines of Corollary 5.24 in [5] and Theorem 2.1. We present another proof here. Note that the infinitesimal charac-ter of \( X _ { \mathcal { O } } ^ { + } \) and \( X _ { \mathcal { O } } ^ { - } \) are both \( W \times W \)-conjugacy class of) \( ( \lambda _ { \mathcal { O } } , \lambda _ { \mathcal { O } } ) \). By Proposition 1.4, they must be of the form \( L \left( \begin{array} { c } { { \dot { \lambda _ { \mathcal { O } } } } } \\ { { w \lambda _ { \mathcal { O } } } } \end{array} \right) \) for some \( w \in W \). For \( X _ { \mathcal { O } } ^ { + } \),

\[ X _ { \mathcal { O } } ^ { + } \cong \frac { 1 } { 2 } ( R _ { e } + R _ { s } ) = \frac { 1 } { 2 } [ ( X \left( \begin{array} { l } { \lambda _ { \mathcal { O } } } \\ { \lambda _ { \mathcal { O } } } \end{array} \right) + \ldots ) + ( X \left( \begin{array} { l } { \lambda _ { \mathcal { O } } } \\ { \lambda _ { \mathcal { O } } } \end{array} \right) + \ldots ) ] = X \left( \begin{array} { l } { \lambda _ { \mathcal { O } } } \\ { \lambda _ { \mathcal { O } } } \end{array} \right) + \ldots , \]

where the remaining terms are of the form \( X \left( \begin{array} { c } { { \lambda \mathcal { O } } } \\ { { w \lambda \mathcal { O } } } \end{array} \right) \! . \), \( l ( w ) > \) 0. Hence its lowest \( K _ { \mathbb { C } } \)-type is \( \lambda _ { \mathcal { O } } - \lambda _ { \mathcal { O } } = ( 0 ^ { n } ) \). On the other hand, the only \( L \left( \begin{array} { c } { { \lambda \mathcal { O } } } \\ { { w \lambda \mathcal { O } } } \end{array} \right) \) having lowest \( K _ { \mathbb { C } } \)-type \( ( 0 ^ { n } ) \) is \( L \left( \begin{array} { c } { { \lambda _ { \mathcal { O } } } } \\ { { \lambda _ { \mathcal { O } } } } \end{array} \right) . \) By (Remark (b) after) Proposition 1.4 and Theorem 2.1,

\[ \begin{array} { r } { X _ { \mathcal { O } } ^ { + } \cong L \left( \begin{array} { l } { \lambda _ { \mathcal { O } } } \\ { \lambda _ { \mathcal { O } } } \end{array} \right) \cong L \left( \begin{array} { l l l } { p + q , \dots , 2 , 1 ; } & { p - 1 , \dots , 1 , 0 } \\ { p + q , \dots , 2 , 1 ; } & { p - 1 , \dots , 1 , 0 } \end{array} \right) \cong \theta ( \mathrm { t r i v } ) . } \end{array} \]

For \( X _ { \mathcal { O } } ^ { - } \), a direct computation shows that the term

appears in the expression \( \begin{array} { r } { X _ { \mathcal { O } } ^ { - } \cong \frac { 1 } { 2 } ( R _ { e } - R _ { s } ) } \end{array} \) with coefficient 1. Hence \( X _ { \mathcal { O } } ^ { - } \) must have lowest \( K _ { \mathbb { C } } \)-type smaller than or equal to \( ( 1 ^ { 2 p } 0 ^ { q } ) \sim ( \lambda _ { \mathcal { O } } \! - \! w _ { p } \lambda _ { \mathcal { O } } ) \), that is, the lowest \( K _ { \mathbb { C } } \)-type must be of the form \( ( 1 ^ { 2 i } 0 ^ { n - 2 i } ) \) with \( i \leq p \). However, another direct computation shows that all terms of the form

\[ \{ X \left( \begin{array} { c } { { \lambda \mathcal O } } \\ { { w \lambda \mathcal O } } \end{array} \right) | w \in W , \; ( \lambda \mathcal O - w \lambda \mathcal O ) \sim ( 1 ^ { 2 i } 0 ^ { n - 2 i } ) , \; i < p \} \]

do not appear in the expression of \( X _ { \mathcal { O } } ^ { - } \). Therefore, the lowest \( K _ { \mathbb { C } } \)-type of \( X _ { \mathcal { O } } ^ { - } \) must be \( \left( 1 ^ { 2 p } 0 ^ { q } \right) \).

Suppose \( X _ { \mathcal { O } } ^ { - } \cong L \left( \begin{array} { c } { \lambda \mathcal { O } } \\ { w \lambda \mathcal { O } } \end{array} \right) \) for some \( w \in W \), then we have


Libertatem would suggest: The UK adopts the MIFID II definitions which make Independent” advisers. Fee based, whole of market and Independent of undue influence via ownership or other agreement. This would allow most restricted advisers to re-join the Independent camp

Under MIFID II: Non-Independent advisers can receive commission, use panels of providers etc. As long as this is properly disclosed we feel that this may well provide access to advice for some of those who were disenfranchised by RDR. It may make sense to remove the term “Restricted” and use the term “Regulated”.

Adopting MIFID II definitions would both realign the UK with Europe but also use terms which are more easily understood

That all the stakeholders agree a set of definitions for advice and guidance which are used by all to improve communication and avoid many of the current misunderstandings.

Q3: What comments do you have on consumer demand for professional financial advice?

Thanks to THR2: We know that the historical market for Independent Advice was 16m. We also know that advisers could be split into three specific groups.

THR2 Identified the numbers of clients under each definition

Boutique advisers enjoy a per adviser range between 10 and 120 although the current average is 159. This is likely to drop significantly.

Segregated Adviser will be the way forward for the adviser who wants more than a lifestyle business as it can offer a capital exit in the future. The current per adviser average is 191

Generalist/Transactional advisers currently show 205 active clients per adviser. But they also have another 400+ old clients who may return.

Most of the 3,250 who have exited the sector since 2010 have been Generalist adviser and some had client banks in excess of 1,000 clients

Libertatem suggests: At least 4m consumers seem to have successfully made the RDR transaction to fees. Circa 2,500 – mostly attached to generalist advisers - may be less secure particularly if we continue to see Trail Commission being reneged on by providers.

If we are to see a reconnection between advice and the 10m ex IFA clients, we will need to recreate the new version of the commission based market (See National Advice Service)

# Q.4: Do you have any comments or evidence on the level of demand for advice from sources other than professional financial advisers?

There is no shortage of PR noise from a number of investment platforms that seek to deal directly with the client. But currently there is little evidence that this noise is converting into profitable business. Such firms will have resolved the matter in the next 3 years. Either they will have reached the tipping point into profit or their investors will have given up.

The missing link of many non-advised options is “the Challenge”.

This is the first step to a client making private provision and the most important aspect of an adviser’s day. The challenge comes twice in any client relationship. Firstly, when a client is challenged to seek advice and secondly when the client is challenged to accept the solutions are suggested.

This challenge can only be done by human interaction. We do not see it being done by computers, Robo Advice or other androids. It is possible via Skype but better achieved face to face. Much of the enthusiasm for new processes presumes that clients will challenge themselves – this is unlikely and unproven.

The price of RDR’s commission free world is the removal of that challenge from the common man and with it any independence from the state when in need.

# Q5: Do you have any comments or evidence on the types of financial needs for which consumers may seek advice?

RDR has sought to push the adviser community towards the Boutique model. It presumed that all clients wanted an intimate relationship with their advisers in which there were regular reviews. In essence that the IFA sector should be restricted to financial planning.

The reality was that the vast majority of clients were transactional and wanted a once off or a once in a while advisory event or the solution of a specific issue. They did not seek regular connection. At the same time RDR sought to make all advisory firms the same and restrict their activities and the accessibility of advice

Post RDR - adviser firms had all the same qualifications and were trading in the same market using the same basic business model. So now advisers have difficulty distinguishing themselves from the competition.

Q6: Is the FCA Consumer Spotlight segmentation model useful for exploring consumers’ advice needs?

No appears to be a complete waste of money unless you are a regulator seeking to increase your empire

# Q7: Do you have any observation on the segments and whether any should be the subject of particular focus in the Review?


# 27. FAIR VALUE OF ASSETS AND LIABILITIES

The Group categorises fair value measurements using a fair value hierarchy that is dependent on the valuation inputs used as follows:

– Level 1	–    Quoted prices (unadjusted) in active market for identical assets or liabilities that the Group
can access at the measurement date,

– Level 2	–    Inputs other that quoted prices included within Level 1 that are observable for the asset
or liability, either directly or indirectly, and

– Level 3	–     Unobservable inputs for the asset or liability.

Fair value measurements that use inputs of different hierarchy levels are categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

# (b) Assets and liabilities not carried at fair value but for which fair value is disclosed

Trade and other receivables, trade and other payables, accrued operating expenses and amounts due from/(to) subsidiaries and associates (current)

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values due to their short-term nature.

The carrying amount of pledged fixed deposit closely approximates its fair value as the interest rate of this financial asset approximates its market rate on or at the end of the reporting period.

# (c) Assets and liabilities not carried at fair value and whose carrying amounts are not reasonable approximation of fair value.

# Amounts due from subsidiaries and associates (non-current) and Contract Deposit

The non-current amounts due from subsidiaries and associates have no fixed terms of repayment. Accordingly, the fair values cannot be measured reliably as the timing of e future cash flows cannot be determined.

Contract Deposit has no fixed terms of repayment. Accordingly, the fair values cannot be measured reliably as the Contract Deposit is interest-free.

# 28. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group and the Company is exposed to financial risks arising from its operations and the use of financial instruments. The key risks include credit risk, liquidity risk and foreign currency risk. The Board of Directors reviews and agrees policies and procedures for the management of these risks. The Audit Committee provides independent oversight to the effectiveness of the risk management process. It is, and has been throughout the current and previous financial years, the Group’s policy that no trading in derivatives for speculative purposes shall be undertaken.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables, cash and short-term deposits. For other financial assets (including cash and short-term deposits), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. In addition, receivable balances are monitored on an ongoing basis.

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographic region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Group’s performance to developments affecting a particular industry.

In order to avoid excessive concentrations of risk, the Group’s policies and procedures include specific guidelines to focus on maintaining a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly. Selective hedging is used within the Group to manage risk concentrations at both the relationship and industry levels. The Group does not apply hedge accounting.

At the end of the reporting period, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position.

Information regarding credit enhancements for trade and other receivables is disclosed in Note 16.


• authorise the Company to place HKSCC Nominees name on the Company’s register of members as the holder of the Hong Kong Offer Shares allocated to you and to send Share certificate(s) and/or refund monies under the arrangements separately agreed between us and HKSCC;

• confirm that you have read the terms and conditions and application procedures set out in this prospectus and agree to be bound by them;

• confirm that you have received and read a copy of this prospectus and have relied only on the information and representations in this prospectus in causing the application to be made, save as set out in any supplement to this prospectus;

• agree that none of the Company or the Relevant Persons is or will be liable for any information and representations not contained in this prospectus (and any supplement to it);

• agree to disclose to the Company, the Hong Kong Share Registrar, the receiving bank and the Relevant Persons any personal data which they may require about you;

• agree (without prejudice to any other rights which you may have) that once HKSCC Nominees application has been accepted, it cannot be rescinded for innocent misrepresentation;

• agree that any application made by HKSCC Nominees on your behalf is irrevocable on or before the fifth day after the time of the opening of the application lists (excluding any day which is a Saturday, Sunday or public holiday in Hong Kong), such agreement to take effect as a collateral contract with the Company, and to become binding when you give the instructions and such collateral contract to be in consideration of the Company agreeing that it will not offer any Hong Kong Offer Shares to any person on or before the fifth day after the time of the opening of the application lists (excluding any day which is a Saturday, Sunday or public holiday in Hong Kong), except by means of one of the procedures referred to in this prospectus. However, HKSCC Nominees may revoke the application on or before the fifth day after the time of the opening of the application lists (excluding for this purpose any day which is a Saturday, Sunday or public holiday in Hong Kong) if a person responsible for this prospectus under Section 40 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance gives a public notice under that section which excludes or limits that person’s responsibility for this prospectus;

• agree that once HKSCC Nominees’ application is accepted, neither that application nor your electronic application instructions can be revoked, and that acceptance of that application will be evidenced by the Company’s announcement of the results of the Hong Kong Public Offering;

• agree to the arrangements, undertakings and warranties under the participant agreement between you and HKSCC, read with the General Rules of CCASS and the CCASS Operational Procedures, for giving electronic application instructions to apply for Hong Kong Offer Shares;

• agree with the Company, for itself and for the benefit of each Shareholder (and so that the Company will be deemed by its acceptance in whole or in part of the application by HKSCC Nominees to have agreed, for itself and on behalf of each of the Shareholders, with each CCASS Participant giving electronic application instructions) to observe and comply with the Companies Ordinance, the Companies (Winding Up and Miscellaneous Provisions) Ordinance and the Articles of Association; and

• agree that your application, any acceptance of it and the resulting contract will be governed by and construed in accordance with the Laws of Hong Kong.

# Effect of Giving Electronic Application Instructions to HKSCC via CCASS

By giving electronic application instructions to HKSCC or instructing your broker or custodian who is a CCASS Clearing Participant or a CCASS Custodian Participant to give such instructions to HKSCC, you (and, if you arej oint applicants, each of youj ointly and severally) are deemed to have done the following things. Neither HKSCC nor HKSCC Nominees shall be liable to the Company or any other person in respect of the things mentioned below:

• instructed and authorised HKSCC to cause HKSCC Nominees (acting as nominee for the relevant CCASS Participants) to apply for the Hong Kong Offer Shares on your behalf;

• instructed and authorised HKSCC to arrange payment of the Maximum Offer Price, brokerage, SFC transaction levy and the Stock Exchange trading fee by debiting your designated bank account and, in the case of a wholly or partially unsuccessful application and/or if the Offer Price is less than the Maximum Offer Price per Offer Share initially paid on application, refund of the application monies (including brokerage, SFC transaction levy and the Stock Exchange trading fee) by crediting your designated bank account; and

• instructed and authorised HKSCC to cause HKSCC Nominees to do on your behalf all the things stated in the WHITE Application Form and in this prospectus.

# Minimum Purchase Am ount and Permitted Numbers

You may give or cause your broker or custodian who is a CCASS Clearing Participant or a CCASS Custodian Participant to give electronic application instructions for a minimum of 200 Hong Kong Offer Shares. Instructions for more than 200 Hong Kong Offer Shares must be in one of the numbers set out in the table in the Application Forms. No application for any other number of Hong Kong Offer Shares will be considered and any such application is liable to be rejected.


# 2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”) (continued)

# HKFRS 9 Financial Instruments (continued)

In general, the Directors anticipate that the application of the expected credit loss model of HKFRS 9 will result in earlier provision of credit losses which are not yet incurred in relation to the Group’s financial assets measured at amortised costs and other items that subject to the impairment provisions upon application of HKFRS 9 by the Group.

Based on the assessment by the Directors, if the expected credit loss model were to be applied by the Group, the accumulated amount of impairment loss to be recognised by the Group as at 1st January, 2018 would be increased as compared to the accumulated amount recognised under HKAS 39 mainly attributable to expected credit losses provision on debtors. Such further impairment recognised under expected credit loss model would reduce the opening retained profits at 1st January, 2018.

HKFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. HKFRS 15 will supersede the current revenue recognition guidance including HKAS 18 Revenue, HKAS 11 Construction Contracts and the related interpretations when it becomes effective.

The core principle of HKFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition:

• Step 1: Identify the contract(s) with a customer

• Step 2: Identify the performance obligations in the contract

• Step 3: Determine the transaction price

• Step 4: Allocate the transaction price to the performance obligations in the contract

• Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

Under HKFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in HKFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by HKFRS 15.

In 2016, the HKICPA issued clarifications to HKFRS 15 in relation to the identification of performance obligations, principal versus agent considerations, as well as licensing application guidance.

# HKFRS 15 Revenue from Contracts with Customers (continued)

The management of the Group anticipate that the application of HKFRS 15 in the future may result in more disclosures, however, the management of the Group do not anticipate that the application of HKFRS 15 will have a material impact on the timing and amounts of revenue recognised in the respective reporting periods.

HKFRS 16 introduces a comprehensive model for the identification of lease arrangements and accounting treatments for both lessors and lessees. HKFRS 16 will supersede HKAS 17 Leases and the related interpretations when it becomes effective.

HKFRS 16 distinguishes lease and service contracts on the basis of whether an identified asset is controlled by a customer. Distinctions of operating leases and finance leases are removed for lessee accounting, and is replaced by a model where a right-of-use asset and a corresponding liability have to be recognised for all leases by lessees, except for short-term leases and leases of low value assets.

The right-of-use asset is initially measured at cost and subsequently measured at cost (subject to certain exceptions) less accumulated depreciation and impairment losses, adjusted for any remeasurement of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at that date. Subsequently, the lease liability is adjusted for interest and lease payments, as well as the impact of lease modifications, amongst others. For the classification of cash flows, the Group currently presents upfront prepaid lease payments as investing cash flows in relation to leasehold lands for owned use and those classified as investment properties while other operating lease payments are presented as operating cash flows. Upon application of HKFRS 16, lease payments in relation to lease liability will be allocated into a principal and an interest portion which will be presented as financing cash flows by the Group.

Under HKAS 17, the Group has already recognised an asset for prepaid lease payments for leasehold lands where the Group is a lessee. The application of HKFRS 16 may result in potential changes in classification of these assets depending on whether the Group presents right-of-use assets separately or within the same line item at which the corresponding underlying assets would be presented if they were owned.

In contrast to lessee accounting, HKFRS 16 substantially carries forward the lessor accounting requirements in HKAS 17, and continues to require a lessor to classify a lease either as an operating lease or a finance lease.

Furthermore, extensive disclosures are required by HKFRS 16.


The analysis of the net book value of right-of-use assets by class of underlying asset is as follows:

	As of March 31,	As of
August 6,
2019

2018	2019

HK$’000	 HK$’000	 HK$’000

Buildings leased for own use, carried at depreciated cost ......	3,386	3,350	2,116

Orizen Group has obtained the right to use other properties as its offices and warehouses through tenancy agreements. The leases typically run for an initial period of 1 to 3 years.

The analysis of expense items in relation to leases recognized in the consolidated statement of profit or loss and other comprehensive income is as follows:

	As of March 31,	Period from
April 1, 2019 to
August 6, 2019

2018	2019

HK$’000	 HK$’000	 HK$’000

Depreciation charge of rihgt-of-use assets by class of
underliyng asset:

Buildings leased for own use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	616	2,431	1,744

Interest on lease liabilities (note (3)(i)) . . . . . . . . . . . . . . . . . . . . .	43	117	35

Details of Orizen’s subsidiary are as follows:

Company name	Form of
business
structure	Place of
incorporation
and
business	Particulars
of issued
and paid-up
caiptal	Proportion of ownership interest	Principal
activities

effective
interest	Held by
Orizen	Held by a
subsidiary

PCCH	 Incorporated	 Hong Kong	 100 ordinary
shares	100%	100%	 –	 Trading,
wholesaling
and
retailing
of Chinese
medicine

# (i) Inventories in the consolidated statement of financial position comprise:

At March 31, 2018 and 2019 and August 6, 2019, the deposits and prepayments expected to be recovered after more than one year amounted to HK\$745,000, HK\$727,000 and HK\$926,000 respectively. The remaining trade and other receivables are expected to be recovered within one year.

Orizen Group normally allows a credit period of within 90 days to its customers.

As of the end of the reporting period, the aging analysis of trade receivables (which are included in trade and other receivables) based on the invoice date and net of loss allowance, is as follows:

The aging analysis of trade receivables (net of loss allowance) by due dates is as follows:

# (11) Cash and cash equivalents and other cash flow information

# (i) Cash and cash equivalents comprise:

# (ii) Reconciliation of profit before taxation to cash generated from operations:


superintelligence” alternatives, in which machine superintelligences interact with otherwise human-led corporations or nation-states. The four scenarios are as follows:

State/AI: individual nation-states control and ally with multiple machine intelligences.

Corporate/AI: For-profit corporations control the most powerful and rapidly improving AIs.

Self-interested super-AI: AIs act solely in their own interests, rather than being aligned with either humans or hybrid Superintelligences.

Optimistic AI: Machine intelligences are not allied with each other but rather work to further the goals of humanity as a whole.25

These scenarios are not outlandish. Less sophisticated leaders may look at these scenarios and ask questions such as the following: What implications would these scenarios have on your governance agenda? What testing and safety should we insist on before implementing hybrid superintelligence? In what parts of your organization do you most need to invite advanced AI? Essentially, these leaders are considering how they can outcompete others in the various scenarios.

These questions are outdated if used in isolation. Threshold leaders will approach Hillis’s scenarios with greater complexity of mind, by also exploring questions such as: Who really governs our universe? From where does wisdom come? How do we know what constitutes good government?What intuition am I getting from the periphery about governance? What is my gut telling me? How is everything linked? In asking these higher order questions, you are discovering and connecting with what your “macro violin” means for you. Such complex observations are provisional, even speculative. But epochal human breakthrough will not come in well-worn paths. It will come at the edges, where we peer toward the future.

Emergent wisdom is triply open to ethereal clues. For many who believe that the divine is beyond time, the system of our universe is not closed at the beginning of time as we know it. For those who do not believe in the divine, the initial conditions of our universe still carry a fascination and a wonder. In either case, the beginnings of our existence are open in some way. Advancing AI also invites us into a system that is open at the other end, in the sense of being emergent. Our universe may actually be trebly

open: not just open beginnings, not just an open AI future, but also an open-ended process of increasing human maturity. This is a thrilling three-stranded cord.

Threshold leaders will step to a different rhythm and climb a different hill. They work with clues they have received during life. They prize an open view of the universe. They know that AI does not have to outshine humanity. Even if the first Superintelligences are malicious, wise leaders will maximize the chances that Superintelligence turns toward better purposes.

Love and wisdom fuel all four pathways of this book. We do not just offer love and wisdom, we cultivate them in stillness, we attend to them, we embody them, we seek them humbly, playfully, and at ease. In a world where machines score A+ on everything, let us establish love and wisdom as the beating heart.

Resource 22. Three Loving, Wise Transformational Habits of Mind

This is a five-step reflective exercise that takes about forty-five minutes. Each step starts with the letter A.

Jennifer Garvey Berger and Keith Johnson developed the three transformational habits that form the core of this resource. The habits and several other prompts in the “adopt” step of this resource are contained in Garvey Berger’s book Changing on the Job. As Jennifer told me when we discussed them in the context of this book, “If you anchor to these habits, the work you do stands a fair chance of being transformational in some way, because the habits have this quirky advantage of being able to shape what you do in the moment and also being able to grow you over time.”


“Flood Documents” has the meaning specified in the definition of “Collateral and Guaranty Requirements”.

“Flood Laws” means the National Flood Insurance Reform Act of 1994 and related legislation (including the regulations of the Board of Governors of the Federal Reserve System).

“Foreign Borrower” has the meaning specified in the preamble to this Agreement.

“Foreign Borrower Obligations” means the Obligations of any Borrower other than any U.S. Borrower.

“Foreign Collateral Documents” means (a) each Other Foreign Security Agreement, the Japanese Pledge Agreement (all Obligations), the Mexican Pledge Agreement (all Obligations), the Canadian Pledge Agreement, the Swedish Pledge Agreement, the U.K. Pledge Agreement, each Other Foreign Pledge Agreement, the Other Foreign Mortgages, each of the other mortgages, collateral assignments, security agreements, pledge agreements, hypothecs, bonds, control agreements or other similar agreements or supplements to the foregoing (i) entered into by any Loan Party, (ii) delivered to the Administrative Agent pursuant to the Collateral and Guaranty Requirements or pursuant to Section 6.11 for the benefit of any or all of the Secured Parties and (iii) governed by the laws (other than the laws of the United States or any state or other political subdivision thereof) of any nation, state, province or other political subdivision thereof, and (b) each of the other agreements, instruments or documents entered into by any Loan Party, governed by the laws (other than the laws of the United States or any state or other political subdivision thereof) of any nation, state, province or other political subdivision thereof, that creates or purports to create a Lien in favor of the Administrative Agent for the benefit of any or all of the Secured Parties.

“Foreign Guarantors” means and includes each Foreign Borrower and each Foreign Subsidiary Guarantor.

“Foreign Lender” means (i) with respect to any Loan made to a U.S. Borrower, a Lender that is not a U.S. Person and (ii) with respect to any Loan made to a Foreign Borrower, any Lender that is not organized under the laws in which such Foreign Borrower is resident for tax purposes and that is not otherwise considered or deemed in respect of any amount payable to it hereunder or under any Loan Document to be resident for income tax or withholding tax purposes in the jurisdiction in which such Borrower is resident for tax purposes by application of the laws of that jurisdiction.

“Foreign Loan Party” means each Foreign Borrower and each other Foreign Guarantor.

“Foreign Obligations” means the Foreign Borrower Obligations, all Obligations of any Foreign Loan Party or any Foreign Subsidiary under any Secured Cash Management Agreement or any Secured Hedge Agreement, all Obligations of any Foreign Loan Party under any Specified Supply Chain Agreement and Obligations of any Foreign Loan Party under any guarantee or security agreement related to any of the foregoing.

“Foreign Obligations Guaranty” means an agreement in substantially the form of Exhibit H with such changes as are reasonably satisfactory to the Administrative Agent.

“Foreign Obligations Secured Parties” means, collectively, (i) the Administrative Agent, (ii) each Lender making a Loan or other extension of credit hereunder to, or having commitments under this Agreement to, any Foreign Borrower, (iii) each L/C Issuer issuing a Letter of Credit or amending or extending any issued Letter of Credit for the account of any Foreign Borrower, (iv) with respect to any Secured Cash Management

Agreement with a Foreign Loan Party or any other Foreign Subsidiary, the Cash Management Banks party thereto, (v) with respect to any Secured Hedge Agreement with a Foreign Loan Party or any other Foreign Subsidiary, the Hedge Banks party thereto, (vi) with respect to any Specified Supply Chain Agreement in respect of any Permitted Supply Chain Financing with a Foreign Loan Party, the Supply Chain Finance Banks party thereto and (vii) each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section 9.05.

“Foreign Pension Plan” means any plan, fund (including any superannuation fund) or other similar program established or maintained outside the United States by Holdings, or any one or more of its Subsidiaries (other than Immaterial Subsidiaries) primarily for the benefit of employees of Holdings, or such Subsidiaries residing outside the United States, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.

“Foreign Pension Plan Event” means, with respect to any Foreign Pension Plan, (a) the existence of unfunded liabilities in excess of the amount permitted under any applicable law, or in excess of the amount that would be permitted absent a waiver from a Governmental Authority, (b) the failure to make the required contributions or payments, under any applicable law, on or before the due date for such contributions or payments, (c) the receipt of a notice by a Governmental Authority relating to the intention to terminate any such Foreign Pension Plan or to appoint a trustee or similar official to administer any such Foreign Pension Plan, or alleging the insolvency of any such Foreign Pension Plan, (d) the incurrence of any liability by Holdings or any of its Subsidiaries under applicable law on account of the complete or partial termination of such Foreign Pension Plan or the complete or partial withdrawal of any participating employer therein, or (e) the occurrence of any transaction that is prohibited under any applicable law and that could reasonably be expected to result in the incurrence of any liability by Holdings or any of its Subsidiaries, or the imposition on Holdings or any of its Subsidiaries of any fine, excise tax or penalty resulting from any noncompliance with any applicable law, and which events under clauses (a) through (e) above, either individually or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect.

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

“Foreign Subsidiary Guarantor” means subject to the Agreed Security Principles, each Foreign Subsidiary of Holdings that is organized under the laws of the same jurisdiction as any Borrower (other than any U.S. Borrower) (it being understood that entities organized under the laws of different states, provinces, or other localities of the same country as that of a Borrower shall be considered to be of the same jurisdiction as such Borrower for such purposes) whether existing on the Restatement Date or established, created or acquired after the Restatement Date, in each case unless and until such time as the respective Foreign Subsidiary is released from all of its obligations under the Foreign Obligations Guaranty and the Collateral Documents (if any) to which it is a party in accordance with the terms and provisions hereof.

“FRB” means the Board of Governors of the Federal Reserve System of the United States.

“Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to the L/C Issuer, such Defaulting Lender’s Applicable Percentage of the outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof and (b) with respect to the Swing Line Lender, such Defaulting Lender’s Applicable Percentage of Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.


FIG. 4: Measured parallel momentum distributions for the ground state and the states at 4382, 4766, 4960 and 5096 keV (displayed in red in the level scheme) of \( ^ { 3 5 } \mathbf { P } \). The bottom panel shows that for \( ^ { 3 6 } \mathbf { P } \) nucleus, as produced from \( ^ { 3 6 } \mathrm { S } \). The verti-cal dashed line, crossing all panels, represents the centroid of the momentum distribution of \( ^ { 3 6 } \mathbf { P } \) nucleus, \( p _ { 0 } \), shifted by the evaporation of a neutron, i.e. \( p _ { 1 } \)=(A-1)/A \( p _ { 0 } \). It is seen that the distributions for all states labeled red in the level scheme are shifted relative to that of the \( ^ { 3 5 } \mathrm { P } \) ground state, that is produced via direct one-proton knockout.

section of about 2.5 mb was measured at similar beam energy for the sd-shell nucleus \( { } ^ { 2 2 } \mathrm { M g } \) [32]. It follows that the TS mechanism would have a rather low cross section, of the order of 0.10 mb, that is a factor of 20 lower than we observe for the sum over all states with shifted mo-mentum distributions. It is therefore likely that a more direct process is needed to account for the measured cross section.

Charge-exchange reactions occur more favorably with an allowed GT operator (\( \Delta L \)=0,\( \Delta J = \)=0 \( , \pm \) 1, \( \Delta \pi \)=no) that would lead to the production of \( 1 + \) states in \( ^ { 3 6 } \mathbf { P } \) starting from the \( 0 ^ { + } \) ground state of \( ^ { 3 6 } \mathrm { S } \). Higher momen-tum transfers are also observed when very strict kine-matic condition for the reaction as well as suitable target excitations cannot be selected, as in the present exper-iment. Moreover, having a closed neutron sd shell, the exchange of an sd proton to an sd neutron orbital that would lead to \( 1 ^ { + } \) states in \( ^ { 3 6 } \mathrm { S } \) is strongly hindered by Pauli blocking. Rather, transfer to the f p or to the high-est \( g - s d \) orbits must become largely competitive. The non-feeding of any of the known \( 1 + \) states in \( { } ^ { 3 6 } \mathrm { P } \) but the population of the negative parity states \( 4 ^ { - } \) (g.s.), \( 3 ^ { - } \) (250 keV) and of the tentatively assigned \( 2 ^ { - } \) (425 keV) through low-energy charge-exchange reactions of Ref. [33] are in line with the above assumptions. In the present experiment, several \( \gamma \) rays are observed in coin-cidence with \( ^ { 3 6 } \mathbf { P } \) (see Fig. 5). However, none of them arise from the deexcitation of the \( ^ { 1 + } \) states at 1303 keV and 2281 keV that were populated in the \( \beta \) decay of \( ^ { 3 6 } \mathrm { S i } \) to \( { } ^ { 3 6 } \mathrm { \mathbf { C } } \) [34] and whose decay occurs through \( \gamma \) rays of 878 keV and (934, 977, 1858 keV), respectively, as in Ref. [33]. Even if the present statistics does not allow ex-tracting \( \gamma \)-\( \gamma \) coincidences, the observation of transitions at 250 keV and about 170 keV suggest the feeding of the \( 3 ^ { - } \) and \( 2 ^ { - } \) states, respectively. Other transitions are ob-served, but none (except perhaps the 2020(20) keV from[35]) were reported in previous works. Interestingly, one transition is seen at 4050 keV, i.e. about 600 keV above the neutron emission threshold of 3.465 MeV. This state seems to decay preferentially through a \( \gamma \)-ray transition rather than neutron decay to the \( 1 / 2 ^ { + } \) ground state of \( ^ { 3 5 } \mathrm { P } \).

FIG. 5: Doppler-corrected \( \gamma \)-decay spectrum for the \( ^ { 3 6 } \mathrm { { P } } \) nu-cleus populated from \( ^ { 3 6 } \mathrm { S } \) in a nucleon-exchange reaction.

The last hypothesis is that these momentum-shifted distributions result from the proton knockout from a state excited in inelastic scattering. Such a TS reaction was discussed as one possibility to account for the obser-vation of a \( \gamma \)-decaying neutron-unbound state in \( ^ { 3 5 } \mathrm { S i } \) at 3.611 MeV (\( S _ { n } \)=2.470(40) MeV) populated in the \( ^ { 3 6 } \mathrm { S i } \)(−1n) reaction [22]. As shown in Fig. 4 of Ref. [22], the momentum distribution associated with the production of this unbound state appears to lie dominantly in the low-momentum tail of the \( ^ { 3 5 } \mathrm { S i } \) distribution, possibly in-dicating that its centroid is shifted to lower momentum. The production of such a state was evaluated in Ref. [22]to be of 0.8(2) mb, a value that is comparable to the par-tial cross sections for the states which are observed with a

shifted momentum distribution in our work. A total cross section of 2.4(4) mb is indeed obtained by summing over the four states represented in red in Fig. 2. Contrary to the case presented in Ref. [22], the states here possibly produced by the same TS mechanism are below the neu-tron separation energy. This could be due to the fact that the neutron emission threshold of \( ^ { 3 5 } \mathrm { P } \) (\( S _ { n } \)=8.380 MeV) is much higher than the one of \( ^ { 3 5 } \mathrm { S i } \) (\( S _ { n } \)=2.470 MeV).

The spectroscopy of \( { } ^ { 3 5 } \mathbf { P } \) was investigated with an intermediate-energy one-proton knockout reaction using a secondary beam of \( ^ { 3 6 } \mathrm { S } \) interacting with a \( ^ { 9 } \mathrm { B e } \) foil at 88 MeV/u mid-target energy. The \( { } ^ { 3 5 } \mathbf { P } \) nuclei were selected by the S800 spectrograph at NSCL and identified in the spectrograph’s focal plane in coincidence with prompt \( \gamma \) rays detected in the GRETINA segmented Ge array around the target. The level scheme of \( { } ^ { 3 5 } \mathrm { P } \) has been es-tablished up to about 7.5 MeV from \( \gamma - \)\( \gamma \) coincidences and relative \( \gamma \) intensities. Spins and parities for most of the populated states were proposed from a comparison be-tween calculated and measured \( \gamma \)-gated momentum dis-tributions for the population of individual final states in \( { } ^ { 3 5 } \mathrm { P } \). Spectroscopic factor values, \( C ^ { 2 } S , \), were derived from partial cross sections for the \( 1 / 2 ^ { + } \) ground state and the excited states \( ( 3 / 2 ^ { + } \),\( 5 / 2 ^ { + } \) and tentatively \( 1 / 2 ^ { - } \)) in \( { } ^ { 3 5 } \mathrm { P } \). An inclusive cross section of 51(1) mb was measured for

. The extracted summed \( \sum C ^ { 2 } S \) values agree with expected shell-model occupancies of the protons in the \( 2 s _ { 1 / 2 } \) (\( \sum C ^ { 2 } S = \) 2.2(\( 7 ) \)), \( 1 d _ { 3 / 2 } \) (0.7(3)), \( 1 d _ { 5 / 2 } \) (5.2(9)) or-bitals, while only a fraction (0.41(17)) of the strength corresponding to the deeply-bound \( 1 p _ { 1 / 2 } \) orbit is tenta-tively observed for two states above 5.6 MeV.

The present results were compared to those obtained for \( { } ^ { 3 5 } \mathrm { \mathbf { P } } \) using the \( ^ { 3 6 } \mathrm { S } ( d , ^ { 3 } \mathrm { H e } ) { } ^ { 3 5 } \mathrm { P } \) transfer reaction at low energy. Remarkable agreement is found for the proposed level scheme populated, the spin assignments (except for one state) and the deduced \( C ^ { 2 } S \) values. Since ob-tained from high-resolution \( \gamma \)-ray spectroscopy, the ex-citation energies of the presently identified states in \( { } ^ { 3 5 } \mathrm { P } \) are more accurate than those obtained in the \( ( d , { ^ { 3 } \mathrm { H e } } ) \) reaction [16]. They agree with the values obtained in a multi-nucleon transfer reaction [25], for which several states were observed in common. The present sensitiv-ity of the knockout reaction, with a projectile beam of 2 \( \cdot \bar { 1 0 ^ { 5 } } \) pps, matches the one obtained in the \( ( d , { ^ 3 } \mathrm { H e } ) \) reac-tion with a d beam on a stable \( ^ { 3 6 } \mathrm { S } \) target. This reinforces the enormous potential of this experimental technique in extracting level schemes, orbital angular momenta, and \( C ^ { 2 } S \) values.

Besides the observation of states that were expected to be produced in the knockout of protons from the \( p - s d \) shell, other states with likely high spin value (\( J \ge 5 / \) 2) and negative parity are observed as well, with a summed partial cross section of about 2.4 mb. Owing to the facts that these states were not observed in the \( ( d , { ^ { 3 } \mathrm { H e } } ) \)) re-action and that they exhibit parallel-momentum distri-butions that are down-shifted as compared to the ones from knockout, we propose that they are produced by an-other mechanism that could be either a charge-exchange or a two-steps mechanism in which a core excitation is followed by a proton knockout. While so far we can-not clearly identify which of these two mechanisms is the most probable, it interestingly leads to the production of states most likely corresponding to neutron-core excita-tions. This feature may be very interesting to single-out intruder states belonging to the so-called island of inver-sion, as evoked in Refs. [22, 37].

This work is supported by the National Science Foun-dation (NSF) under Grant Nos. PHY-1102511 and PHY-1306297 and by the Institut Universitaire de France. GRETINA was funded by the US DOE - Office of Sci-ence. Operation of the array at NSCL is supported by NSF under Cooperative Agreement PHY-1102511 (NSCL) and DOE under grant DE-AC02-05CH11231 (LBNL). O.S wish to thank T. Duguet for fruitful dis-cussions. J.A.T acknowledges support of the Science and Technology Facility Council (UK) grant ST/L005743.


So we have \( g ( P _ { 3 , o _ { 1 } } ^ { \rightarrow } ) \neq g ( P _ { 3 , o _ { 2 } } ^ { \rightarrow } ) \).

Considering the partial graph \( G - P _ { 3 } \), let \( g ( ( G - P _ { 3 } ) _ { o _ { i } } ^ { \rightarrow } = t \) for a specific orientation \( o _ { i } \) and a predator-prey strategy \( s _ { k } \).

For the path \( P _ { 3 } = v _ { 1 } v _ { 2 } v _ { 3 } \) consider the graph \( G ^ { \rightarrow } \) with the predator-prey strategy \( s _ { k } ^ { * } = \)\( ( s _ { 1 } , s _ { k } ) \) and the orientation \( o _ { i } ^ { * } = \{ ( v _ { 1 } , v _ { 2 } ) , ( v _ { 2 } , v _ { 3 } ) , o _ { i } \} \). Clearly arcs to and from \( P _ { 3 } ^ { \rightarrow } \) and the rest of \( G ^ { \rightarrow } \) may exist such that upon applying \( s _ { k } ^ { * } \) we have \( g ( ( G \mathrm { ~ - ~ } P _ { 3 } ) _ { o i } ^ { \rightarrow } ) \mathrm { ~ - ~ } 4 \mathrm { ~ = ~ } t \mathrm { ~ - ~ } 4 \mathrm { ~ \leq ~ } \)\( g ( G ^ { \rightarrow } ) _ { o _ { i } ^ { * } } \leq t + 2 = g ( ( G - P _ { 3 } ) _ { o _ { i } } ^ { \rightarrow } ) + 2 \).

For the path \( P _ { 3 } \, = \, v _ { 2 } v _ { 1 } v _ { 3 } \) consider the graph \( G ^ { \rightarrow } \) with the predator-prey strategy \( s _ { k } ^ { * } = \)\( ( s _ { 1 } , s _ { k } ) \) and the orientation \( o _ { j } ^ { * } = \{ ( v _ { 2 } , v _ { 1 } ) , ( v _ { 1 } , v _ { 3 } ) , o _ { j } \} \). Clearly arcs to and from \( P _ { 3 } ^ { \rightarrow } \) and the rest of \( G ^ { \rightarrow } \) may exist such that upon applying \( s _ { k } ^ { * } \) we have \( g ( ( G - P _ { 3 } ) _ { o _ { i } } ^ { \rightarrow } ) - 8 \, = \, t - 8 \, \leq \)\( g ( G ^ { \rightarrow } ) _ { o _ { j } ^ { * } } \leq t + 4 = g ( ( G - P _ { 3 } ) _ { o _ { j } } ^ { \rightarrow } ) + 4 \).

Since the set of arcs between the two directed paths and the rest of \( G ^ { \rightarrow } \) must specifically remain the same, it follows that:

Therefore, in general the result that there exist at least two different orientations and at

least two different indices of G, such that \( g ( G _ { o _ { i } } ^ { \rightarrow } ) \neq g ( G _ { o _ { j } } ^ { \rightarrow } ) \), follows.

Proposition 2.7. If a cycle \( C _ { n } , n \geq 3 \) and any specific orientation thereof say, \( C _ { n } ^ { \rightarrow } \) is ex-tended to \( C _ { n + 1 } ^ { \rightarrow } \) the residual population over all possible predator-prey strategies applicable to \( C _ { n + 1 } ^ { \rightarrow } \) is given by:

and \( s _ { k } ^ { * } \) is the minimal deviation from \( s _ { k } \) to accommodate arcing to or from \( v _ { n + 1 } \).

Proof. Consider \( C _ { n + 1 } \). We begin by considering any specific orientation of \( C _ { n } \) and denote it \( C _ { n } ^ { \rightarrow } \). Clearly the extension from \( C _ { n } ^ { \rightarrow } \) to \( C _ { n + 1 } ^ { \rightarrow } \) is made possible by squeesing \( v _ { n + 1 } \), (arcing) inbetween two vertices of \( C _ { n } ^ { \rightarrow } \), say \( v _ { s } , v _ { t } \) with 1 \( \leq s , t \leq n \).

Without loss of generality consider the arc \( ( v _ { s } , v _ { t } ) \) in \( C _ { n } ^ { \rightarrow } \). Begin by letting \( v _ { s } \) prey on \( v _ { t } \) by predatoring along the arc \( ( v _ { s } , v _ { t } ) \). After this first step of the Grog algorithm the rest of the application applies to a path \( P _ { n * } ^ { \rightarrow } \) with end vertices \( v _ { s } \) and \( \boldsymbol { v } _ { t } \) having \( \rho ( v _ { s } ) = s - 1 \) and \( \rho ( v _ { t } ) = t - 1 \). After applying \( s _ { k } \) to this path the value \( r _ { s _ { k } } ( C _ { n } ^ { \rightarrow } ) \) is obtained.

We now squeese \( v _ { n + 1 } \) inbetween \( v _ { s } , v _ { t } \) and for any one of the four possible orientation between \( v _ { s } , v _ { n + 1 } , v _ { t } \) we have that if the Grog algorithm is applied to path \( P _ { 3 } ^ { \rightarrow } \), \( V ( P _ { 3 } ) = \)\( \{ v _ { s } , v _ { n + 1 } , v _ { t } \} \) we obtain \( \rho ( v _ { s } ) = s - 1 \), \( \rho ( v _ { n + 1 } ) = n - 1 \), \( \rho ( v _ { t } ) = t - 1 \).

Furthering with the Grog algorithm we are left with exactly the path \( P _ { n * } ^ { \rightarrow } \) mentioned above. Hence the result:


On adoption of HKFRS 8 Operating Segments, the Group has identified its operating segments and prepared segment information based on the regular internal financial information reported to the executive directors for their decisions about resources allocation to the Group’s business components and review of these components’ performance. There are two business components/operating segments in the internal reporting to the executive directors, which are operation and management of retail stores and other related businesses and provision of financing services.

	Operation and
management of
retail stores and
other related
businesses	Provision of
financing
services	Consolidated

RMB’000	RMB’000	RMB’000

Year ended 31 December 2020

Revenue from external customers	422052,	6005,	428057,

lnter-segment revenue	–	–	–

Reportable segment revenue	422052,	6005,	428057,

Segment results	(191980,)	3073,	(188907,)

Other unallocated corporate income			49

Other unallocated corporate expenses			(4669,)

Loss before income tax			(193527,)

	Operation and
management of
retail stores and
other related
businesses	Provision of
financing
services	Consolidated

RMB’000	RMB’000	RMB’000

Year ended 31 December 2020

Other segment information

Interest income	(1171,)	(66)	(1237,)

Additions to non-current assets (other than financial instruments)	120860,	–	120860,

Amortisation of intaniblge assets	553	98	651

Depreciation of rihgt-of-use assets	89348,	–	89348,

Depreciation of proiperty, lpant and equpment	48212,	15	48227,

Gain on disposal of prolperty, pant and eiqupment	(16)	–	(16)

Written-off of property, lpant and eiqupment	36225,	–	36225,

Obsolete inventories written-off	143	–	143

Inventories loss	213	–	213

Impairment loss on rihgt-of-use assets	47278,	–	47278,

Impairment loss on property, lpant and eiqupment	42587,	–	42587,

Impairment loss on loan receivables	–	2076,	2076,

Decrease in fair value of investment properties	7500,	–	7500,

	Operation and
management of
retail stores and
other related
businesses	Provision of
financing
services	Consolidated

RMB’000	RMB’000	RMB’000

At 31 December 2020

Reportable segment assets	1103466,,	46136,	1149602,,

Tax recoverable			66

Other unallocated corporate assets			42466,

Total assets			1192134,,

Reportable segment liabilities	819121,	65	819186,

Provision for taxation			9651,

Deferred tax liabilities			21701,

Other unallocated corporate liabilities			2176,

Total liabilities			852714,


“Controlling
Shareholder(s)”	the controlling Shareholder(s) (having the meaning ascribed to it in the GEM
Listing Rules), namely, Manning Properties, Dr. Chan and Mr. Kwong

“Deed of Non-
Competition”	the deed of non-competition undertaking executed by each of the Controlling
Shareholders in favour of our Company on 27 August 2018, details of which are
set out in the section headed “Relationship with our Controlling Shareholders
— Non-compete undertakings” in the Prospectus

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

“Dr. Chan”	Dr. Chan Yin Nin (陳延年博士), an executive Director and a Controlling
Shareholder holding approximately 68.2% of interests in Manning Properties

“ERB”	the Engineers Registration Board established under the Engineers Registration
Ordinance (Chapter 409 of the Laws of Hong Kong)

“GEM”	GEM operated by the Stock Exchange

“GEM Listing Rules”	the Rules Governing the Listing of Securities on GEM, as amended, supplemented
or otherwise modified from time to time

“Government”	the Government of Hong Kong

“Group”, “our Group”,
“we” or “us”	the Company together with its subsidiaries

“HK$” or “HK dollar(s)”
and “cent(s)”	Hong Kong dollar(s) and cent(s) respectively, the lawful currency of Hong Kong

“HKEX” or
“Stock Exchange”	The Stock Exchange of Hong Kong Limited

“Hong Kong”	the Hong Kong Special Administrative Region of the PRC

“Hong Kong Branch
Share Registrar”	the branch share registrar and transfer office in Hong Kong of the Company,
Tricor Investor Services Limited, located at Level 54, Hopewell Centre, 183
Queen’s Road East, Hong Kong

“Hong Kong Companies
Ordinance”	the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as
amended, supplemented or otherwise modified from time to time

“Internal Control Adviser”	Wellink Corporate Advisory Limited, the internal control adviser of our Company

“Listing”	the listing of our Shares on GEM on the Listing Date

“Listing Date”	17 September 2018, the date on which dealings in the Shares on GEM
commence

“Macau”	the Macau Special Administrative Region of the PRC

“Manning Properties”	Manning Properties Limited (萬年地產發展有限公司), a company incorporated in
the BVI with limited liability on 9 February 2015, and a Controlling Shareholder,
which is wholly-owned by the Concerted Group, comprising Dr. Chan (holding
approximately 68.2% interests in it) and Mr. Kwong (holding approximately
31.8% interests in it)

“Memorandum” or
“Memorandum of
Association”	the memorandum of association of our Company as amended from time to time

“MOP”	Macau pataca, the lawful currency of Macau

“Mr. Kwong”	Mr. Kwong Po Lam (鄺保林先生), an executive Director and a Controlling
Shareholder holding approximately 31.8% of interests in Manning Properties

“Nomination Committee”	the nomination committee of the Board

“Prospectus”	the prospectus of the Company dated 31 August 2018 issued in connection
with the Listing

“Registered Structural
Engineer”	a person whose name is for the time being on the structural engineers’ register
kept by the Building Authority under section 3(3) of the BO

“Remuneration
Committee”	the remuneration committee of the Board

“Reorganisation”	the reorganisation of our Group in preparation for the Listing described in the
section headed “History, Reorganisation and group structure — Reorganisation”
in the Prospectus which was completed on 20 November 2017

“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) as
amended, supplemented or otherwise modified from time to time

“Share Offer”	the issue of 288,000,000 ordinary Shares by way of share offer at a price of
HK$0.20 per Share on 17 September 2018

“Share Option Scheme”	the share option scheme approved and adopted by our Company pursuant to
written resolutions of our Shareholders on 27 August 2018

“Share(s)”	ordinary share(s) of nominal value of HK$0.01 each in the share capital of our
Company

“Shareholder(s)”	holder(s) of our Share(s) from time to time

“subsidiary(ies)”	has the meaning ascribed to it under the GEM Listing Rules


depend on a number of factors, including the successful implementation of our future plans as stated in ‘‘Future plans and use of proceeds’’. Our gross and net profit margins also depend on factors including the selling prices of our products and sales volumes which are outside our control, and therefore we cannot assure you that we will be able to maintain the current level of profit margins in the future. Investors should be aware that we can offer no assurances that we will be able to increase or maintain our historical revenue or profit levels.

# We may not be able to successfully track the fast changing fashion trends and respond to customer demands for garment products.

During the Track Record Period, we sourced mainly woven wear products for our customers. We cannot accurately predict the supply and demand for particular garment products which may change from season to season and from year to year due to factors such as fashion trends or fluctuations in consumer preferences. If consumer demand for woven wear products decreases, our customers may reduce the size of orders placed with us or cease to place orders with us, and our operating results may be materially and adversely affected due to fluctuation in purchase order. If we are unable to predict, identify and respond promptly to such changes, we may not be able to adjust our operations to cope in a timely manner. For example, we may not be able to locate third-party manufacturers to produce other types of garment products that meet our requirements, and we may not have sufficient time to recruit suitable personnel or introduce appropriate changes to our operation model.

# We cannot guarantee the accuracy of facts, projections, other statistics and information derived from various official government publications or the Industry Expert Report, referred to in this prospectus.

Facts, projections, other statistics and information in this prospectus relating to the global and US market and the apparel supply chain management services industry has been derived from various official PRC government publications or obtained from Ipsos. We believe that these publications are appropriate sources for such information and have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading or that any fact has been omitted that would render such information false or misleading. However, we cannot guarantee the quality or reliability of the source materials. They have not been prepared or independently verified by us, the Sponsor, the Sole Lead Manager and the Underwriters or any of our or their respective affiliates or advisers and, therefore, we make no representation as to the accuracy of such facts, forecasts, statistics and information, which may not be consistent with other information compiled elsewhere. Due to possibly flawed or ineffective collection methods or discrepancies between published information and market practice, the facts, forecasts, statistics and information in this prospectus may be inaccurate or may not be comparable to facts, forecasts, statistics and information produced with respect to other economies. Furthermore, we cannot assure you that they are stated or compiled on the same basis or with the same degree of accuracy as may be the case elsewhere. Hence, you should not unduly rely upon the facts, forecasts, statistics and information with respect to the global and US market and the apparel supply chain management services industry contained in this prospectus.

Our sales may be affected by seasonality. Any seasonal fluctuations may affect the number of orders that customers place with us and may not match our expectations, which could adversely affect our financial conditions and results of operation.

Our sales are subject to seasonal fluctuations during the year and are largely determined in part by two major fashion seasons: spring/summer and autumn/winter. We generally record higher sales from December to April for the spring/summer products as our customers have higher demand for woven wear products such as shirts and blouses for their spring/summer collections. These

fluctuations may vary considerably from time to time as a result of changes in seasonal demand. As a result of these fluctuations, comparisons of sales and revenue between different periods within the same financial year, or between the same periods in different financial years, are not necessarily meaningful and cannot be relied upon as indicators of our past or future performance. Any seasonal fluctuations reported in the future may not match our expectations and this could adversely affect our Company’s financial conditions and results of operation.

Fluctuations in consumer spending caused by changes in macroeconomic conditions may significantly affect our business operations, financial condition, results of operations and prospects.

Our customers’ purchasing decisions and quantity of orders they place with us, will be heavily influenced by the likely spending habits of their consumers. Such spending habits may be influenced by macroeconomic conditions in their country of residence. Changes and developments in global political, economic and financial conditions will in turn affect the volume of our business and performance.

If demand from end consumers is low, companies operating in the apparel supply chain management industry may experience significant reductions in orders and greater pricing pressures from customers. Other factors such as the imposition of new trade barriers, sanctions, boycotts and other measures, trade disputes, labour disputes, disruptions to the transportation industry, as well as acts of war or hostilities, could delay or prevent the delivery of apparel products to customers in the US or elsewhere, or even reduce demand for apparel products. If this were to occur, there would be an adverse effect on our business operations, financial condition, results of operations and prospects.

# Increased inspection procedures, tighter import and export controls and additional trade restrictions could increase our operating costs and cause disruption to our business.

The apparel industry is subject to various security and customs inspections and related procedures (“Inspection Procedures”) in countries of origin and destination as well as at transshipment points. Such Inspection Procedures can result in the seizure of apparel products and the levying of customs duties, fines or other penalties against exporters or importers. If Inspection Procedures or other controls are further tightened, we may incur further costs and delays and our business could be harmed.

# An increase in the minimum wage of apparel-making factory workers and pressure to improve working conditions may adversely affect our business operations and financial condition.

Pressure on the governments in countries including Bangladesh and Cambodia to increase the minimum wage of workers in apparel-making factories could increase the operating costs of our third-party manufacturers. This increase may then be passed on to our Group through an increase in subcontracting fees. If we are not able to pass on such additional costs to our customers, this may adversely affect our business operations and financial condition.

# RISKS RELATING TO CONDUCTING BUSINESS IN THE PRC

The economic, political and social conditions of the PRC, as well as its government policies, could adversely affect the financial markets in the PRC and our business and results of operations.

Our operations and financial results could be adversely affected by changes in political, economic and social conditions or the relevant policies of the PRC government, such as changes in laws and regulations (or the interpretations thereof), measures which might be introduced to control inflation, changes in the rate or method of taxation, the imposition of additional restrictions on currency conversion and the imposition of additional export restrictions. Furthermore, a significant portion of


of our products belong to our Group. We are entitled to terminate our agreement as well as damages for delay in any phases of the design process. Mr. Luigi Fabio Piras does not work exclusively for us in the PRC and to the best knowledge of our Directors, he does not do work for other companies in the same industry in the PRC. Our agreement with Mr. Luigi Fabio Piras will expire in October 2014. While there is no renewal term in the existing agreement, we intend to negotiate a new agreement with Mr. Luigi Fabio Piras upon expiration of the existing one.

Ms. Fang Ying graduated from Central Academy of Art and Design\* (中央工藝美術學院) which is currently, Academy of Fine Arts of Tsinghua University (清華大學美術學院) and has further her studies in Ecole Superieure De La Chambre Syndicale De La Couture Parisienne (法國巴黎高級時裝公會學校).She acted as designers and creative directors for various companies since 1998 and has been thej udges for various national apparel design competitions in the PRC. She is the design director (設計總監) of the 5th Fashion and Arts Committee of China Fashion Association\* (中國服裝設計師協會第五屆時裝藝術委員會) and the vice chairman of Guangdong Province Fashion Association\* (廣東省服裝設計師協會). She is also the council member of the China Fashion Association\* (中國服裝設計師協會). During her over 15 years of experience in fashion design, she won a number of awards including 7th China Fashion Design — Golden Award (第7屆中國時裝設計 — 「金頂獎」, Chinese Top 10 Fashion Designers\* (中國十佳時裝設計師), Chinese Excellent Fashion Designers\* (中國優秀服裝設計師),China Best Fashion Designer 2002 (2002年中國最佳時裝設計師) and China Best Womenswear Fashion Designer 2003 (2003年中國最佳女裝設計師). Pursuant to our agreement with Ms. Fang Ying, our Group engaged Ms. Fang Ying over a term of two years and obtained guidance on themes, main colours and materials to be used for each upcoming collection. Consultancy fees are payable at the beginning of each collection during the term of the agreement. The pre-agreed consultancy fees are determined based on the experience, professional capability and quality of services of design consultants in the same industry. Pursuant to our arrangement, Ms. Fang Ying does work exclusively for our Group in the PRC and all the intellectual property rights of our products belong to our Group. Our agreement with Ms. Fang Ying will expire in December 2014. The existing agreement is renewable, subject to terms being agreed between Ms. Fang Ying and us. We intend to negotiate a new agreement with Ms. Fang Ying upon expiration of the existing one.

During the process of the establishment of our Koradior elsewhere brand, I.S. Planning helped us analyse the latest fashion trends, conduct domestic and overseas market researches, plan production as well as other processes such as designing, sampling and fabric and colour planning. I.S. Planning, a Korean company established in 2006, operated by a team with extensive experience in brand building and brand promotion. Their core professional team has over 10 years of experience in the industry. I.S. Planning has helped the establishment of various ladies-wear brands in Korea. I.S. Planning has started its business in the PRC market since its establishment and has provided brand building and brand promotion services to various domestic and international brands in the PRC. Pursuant to our agreement, our Group engaged I.S. Planning for a term of one year. I.S. Planning shall cooperate with us to design and develop the products for the upcoming fall/winter collection and spring/summer collection of our upcoming brand, Koradior elsewhere. We were required to pay around 30% of the total pre-agreed fees at the entry of our agreement, with the balance of remaining fees payable in three phases in each collection, namely, completion of production planning, completion of sample creation and completion of

product mix for the upcoming sales fairs. The pre-agreed fees are determined based on the experience, professional capability and quality of services of similar service providers in the same industry. All the intellectual property rights of our products belong to our Group. I.S. Planning does not work exclusively for us in the PRC and to the best knowledge of our Directors, it does work for other companies in the same industry in the PRC. However, it is prohibited from disclosing our confidential information to any other third party without our prior consent. Our agreement with I.S. Planning will expire in October 2014. While there is no renewal term in the existing agreement, we intend to negotiate a new agreement with I.S. Planning upon expiration of the existing one.

Our design team is also responsible for conceptualising, designing and developing apparel products. Our technical team is primarily responsible for production of samples.

We typically start our design process for our upcoming spring/summer collection and fall/winter collection a year before the relevant collection is released. Once the seasonal themes, main colours and materials to be used are determined by our research team alongside with our design consultants, our design team commences design of the collections. Our design team prepares drawings and sketches of our products and develops the specifications for the materials and accessories to match the design of the collections. We conduct several internal style evaluation meetings before making the final decision as to which styles or products are to be launched in the market for each collection. To encourage the creativeness of our designers, we have established a promotion and demotion system for them pursuant to which they are free to compete constructively. We have also established an incentive plan for our design team such that they are awarded based on various criteria such as design/sales ratio; design innovativeness, mix and match variety and team work. We have also signed confidentiality agreements with some members of the design and product development team to keep our information including but not limited to our product design drawings, paper patterns and processes confidential.

Our design team will communicate with our retail store supervisors on a selected basis through on-site meeting or telephone calls every week to discuss the sales task, feedback on best-selling products and review sales data, in order to understand the sales performance of particular products of our brands and competing brands and identify any design themes with high customer recognition. The store managers report on sales data on a daily basis and prepare sales reports on a weekly basis. Such reports will be analysed and used in our half-yearly product planning and design conference. After that, our designers develop ideas that form the basis of the creation of upcoming collections after consultations with our design consultants. Our sales and marketing team is involved in the design process to ensure that the new collection will better cater to the needs and preferences of our targeted customers.

We have cooperated with I.S. Planning to design and develop the products of our upcoming brand, Koradior elsewhere which is expected to be launched in the second half of 2014. As at the Latest Practicable Date, our design team is working closely with I.S. Planning on 2014 autumn/winter collection and we expect the new collection of Koradior elsewhere could be ready for sale in our first Koradior elsewhere retail stores in the second half of 2014.


The Company's unconsolidated affiliates retired the following construction loans, secured by the related unconsolidated Properties, in 2016:

Date	Property	Interest
Rate at
Repayment Date	Scheduled
Maturity Date	Principal
Balance
Repaid

June	Fremaux Town Center  Phase I (1)	2.44%	August 2016	$            40,530

June	Fremaux Town Center  Phase II (1)	2.44%	August 2016	30,595

June	Ambassador Town Center (2)	2.24%	December 2017	41,885

(1) The construction loan was retired using a portion of the net proceeds from a \$73,000 fixedrate nonrecourse mortgage loan. See 2016 Financings above for more information.

(2) The construction loan was retired using a portion of the net proceeds from a \$47,660 fixedrate nonrecourse mortgage loan. Excess proceeds were utilized to fund remaining construction costs. See 2016 Financings above for more information.

The Company owned a 6.2% noncontrolling interest in Jinsheng, an established mall operating and real estate development company located in Nanjing, China, which owned controlling interests in home furnishing shopping malls. In the fourth quarter of 2016, the Company received \$15,538 from Jinsheng for the redemption of its interest that had a carrying value of \$5,325 and recorded a gain on investment of \$10,136. The Company had previously recorded an otherthantemporary impairment of \$5,306 related to this investment in 2009 upon the decline of China's real estate market. The Company accounted for its noncontrolling interest in Jinsheng using the cost method because the Company did not exercise significant influence over Jinsheng and there was no readily determinable market value of Jinsheng’s shares since they are not publicly traded.

# NOTE 6. MORTGAGE AND OTHER INDEBTEDNESS, NET

CBL has no indebtedness. Either the Operating Partnership or one of its consolidated subsidiaries, that it has a direct or indirect ownership interest in, is the borrower on all of the Company's debt.

CBL is a limited guarantor of the Senior Unsecured Notes, as described below, for losses suffered solely by reason of fraud or willful misrepresentation by the Operating Partnership or its affiliates. The Company also provides a similar limited guarantee of the Operating Partnership's obligations with respect to its unsecured credit facilities and three unsecured term loans as of December 31, 2017.

Mortgage and other indebtedness consisted of the following:

	December 31, 2017	December 31, 2016

Amount	Weihgted-
Average
Interest
Rate (1)	Amount	Weihgted-
Average
Interest
Rate (1)

Fixedrate debt:

   Nonrecourse loans on operating Properties	$     1,796,203	5.33%	$     2,453,628	5.55%

Senior unsecured notes due 2023 (2)	446,976	5.25%	446,552	5.25%

Senior unsecured notes due 2024 (3)	299,946	4.60%	299,939	4.60%

Senior unsecured notes due 2026 (4)	615,848	5.95%	394,260	5.95%

Total fixedrate debt	3,158,973	5.37%	3,594,379	5.48%

Variablerate debt:

Nonrecourse loans on operating Properties	10,836	3.37%	19,055	3.13%

Recourse loans on operating Properties (5)	101,187	4.00%	24,428	3.29%

Construction loan (5)	—	—%	39,263	3.12%

	December 31, 2017	December 31, 2016

Amount	Weihgted-
Average
Interest
Rate (1)	Amount	Weihgted-
Average
Interest
Rate (1)

Unsecured lines of credit	93,787	2.56%	6,024	1.82%

Unsecured term loans (6)	885,000	2.81%	800,000	2.04%

Total variablerate debt	1,090,810	2.90%	888,770	2.15%

Total fixedrate and variablerate debt	4,249,783	4.74%	4,483,149	4.82%

Unamortized deferred financing costs	(18,938)		(17,855)

Total mortgage and other indebtedness, net	$     4,230,845		$     4,465,294

(1) Weightedaverage interest rate includes the effect of debt premiums and discounts, but excludes amortization of deferred financing costs.

(2) The balance is net of an unamortized discount of \$3,024 and \$3,448, as of December 31, 2017 and 2016, respectively.

(3) The balance is net of an unamortized discount of \$54 and \$61, as of December 31, 2017 and 2016, respectively.

(4) In September 2017, the Operating Partnership issued and sold an additional \$225,000 of the series of 2026 Notes. The balance is net of an unamortized discount of\$9,152 and \$5,740 as of December 31, 2017 and 2016, respectively.

(5) The Outlet Shoppes at Laredo opened in 2017 and the construction loan balance from December 31, 2016 is included in recourse loans on operating Properties as of December 31, 2017.

(6) The Company extended and modified its three unsecured term loans in July 2017. See below for additional information.

Nonrecourse and recourse term loans include loans that are secured by Properties owned by the Company that have a net carrying value of \$2,073,448 at December 31, 2017.

Description	Issued (1)	Amount	Interest Rate (2)	Maturity Date (3)

2023 Notes	November 2013	$             450,000	5.25%	December 2023

2024 Notes	October 2014	300,000	4.60%	October 2024

2026 Notes	December 2016 / September 2017 (4)	625,000	5.95%	December 2026

(1) Issued by the Operating Partnership. CBL is a limited guarantor of the Operating Partnership's obligations under the Notes as described above.

(2) Interest is payable semiannually in arrears. The interest rate for the 2024 Notes and the 2023 Notes is subject to an increase ranging from 0.25% to 1.00% from time to time if, on or after January 1, 2016 and prior to January 1, 2020, the ratio of secured debt to total assets of the Company, as defined, is greater than 40% but less than 45%. The required ratio of secured debt to total assets for the 2026 Notes is 40% or less. As of December 31, 2017, this ratio was 23% as shown below.

(3) The Notes are redeemable at the Operating Partnership's election, in whole or in part from time to time, on not less than 30 days and not more than 60 days' notice to the holders of the Notes to be redeemed. The 2026 Notes, the 2024 Notes and the 2023 Notes may be redeemed prior to September 15, 2026; July 15, 2024; and September 1, 2023, respectively, for cash at a redemption price equal to the aggregate principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date and a makewhole premium calculated in accordance with the indenture. On or after the redemption date, the Notes are redeemable for cash at a redemption price equal to the aggregate principal amount of the Notes to be redeemed plus accrued and unpaid interest. If redeemed prior to the respective dates noted above, each issuance of Notes is redeemable at the treasury rate plus 0.50%, 0.35% and 0.40% for the 2026 Notes, the 2024 Notes and the 2023 Notes, respectively.

(4) On September 1, 2017, the Operating Partnership issued and sold an additional \$225,000 of the 2026 Notes. Interest was payable with respect to the additional issuance on December 15, 2017. After deducting underwriting discounts and other offering expenses of \$1,879 and a discount of \$3,938, the net proceeds from the sale were approximately \$219,183. The Operating Partnership used the net proceeds to reduce amounts outstanding under its unsecured credit facilities and for general business purposes.

The Company has three unsecured credit facilities that are used for retirement of secured loans, repayment of term loans, working capital, construction and acquisition purposes, and issuances of letters of credit.

Each facility bears interest at LIBOR plus a spread of 87.5 to 155 basis points based on credit ratings for the Operating Partnership's senior unsecured longterm indebtedness. As of December 31, 2017, the Operating Partnership's interest rate based on the credit ratings of its unsecured longterm indebtedness of Baa3 from Moody's Investors Service ("Moody's"), BBB from Standard & Poor's Rating Services ("S&P") and BB+ from Fitch Ratings ("Fitch"), is LIBOR plus 120 basis points.


# (2).未办妥产权证书的投资性房地产情况

# (1).固定资产情况

# (2).暂时闲置的固定资产情况

# (3).通过融资租赁租入的固定资产情况

# (4).通过经营租赁租出的固定资产

# (5).未办妥产权证书的固定资产情况

# (1).在建工程情况


Aspects, General
Disclosures and KPIs	Description	Relevant Chapter or Explanation

層面，一般披露及
關鍵績效指標	描 述	相關章節或解釋

Aspect B3: Development and Training

層 面B3：發展及培訓

General Disclosure	Policies on improving employees’ knowledge and skills for discharging
duties at work. Description of training activities.	•    Employment and Development
— Employee Development

一般披露	有關提升僱員履行工作職責的知識及技能的政策。描述培訓活動。	•   僱傭與發展
— 員工發展

KPI B3.1	The percentage of employees trained by gender and employee category
(e.g. senior management, middle management).	•    KPIs Performance Table
— Social Area

關鍵績效指標B3.1	按 性別及僱員類 別（如高級管理層、中級管理層等）劃分的受訓僱員百
分比。	•   關鍵績效指標表現數據表
— 社會範疇

KPI B3.2	The average training hours completed per employee by gender and
employee category.	The Group is improving relevant policies
and expects to start statistics in the
next financial year.

關鍵績效指標B3.2	按性別及僱員類別劃分，每名僱員完成受訓的平均時數。	集團正在完善相關政策，預計下一財
政年度開始統計。

Aspect B4: Labour Standards

層 面B4：勞工準則

General Disclosure	Information on:
(a)    the policies; and
(b)   compliance with relevant laws and regulations that have a significant
impact on the issuer relating to preventing child and forced labour.	•    Employment and Development
— Labour Standards
•    Laws and Regulations Table

一般披露	有關防止童工或強制勞工的：
(a) 政策；及
(b) 遵守對發行人有重大影響的相關法律及規例的資料。	•   僱傭與發展
— 勞工標準
•   法律法規列表

KPI B4.1	Description of measures to review employment practices to avoid child and
forced labour.	•    Employment and Development
— Labour Standards

關鍵績效指標B4.1	描述檢討招聘慣例的措施 以 避 免童工及強制勞工。	•   僱傭與發展
— 勞工標準

KPI B4.2	Description of steps taken to eliminate such practices when discovered.	•    Employment and Development
— Labour Standards

關鍵績效指標B4.2	描述在發現違規情況時消除有關情況所採取的步驟。	•   僱傭與發展
— 勞工標準

Aspects, General
Disclosures and KPIs	Description	Relevant Chapter or Explanation

層面，一般披露及
關鍵績效指標	描 述	相關章節或解釋

Operating Practices

營運慣例

Aspect B5: Supply Chain Management

層 面B5：供應鏈管理

General Disclosure	Policies on managing environmental and social risks of the supply chain.	•     Product and Operation
— Supply Chain
Management
— Environmental and Social
Risk Mitigation

一般披露	管理供應鏈的環境及社會風險政策。	•   產品與營運
— 供應鏈管理
— 降低環境及社會風險

KPI B5.1	Number of suppliers by geographical region.	•    KPIs Performance Table
— Social Area

關鍵績效指標B5.1	按地區劃分的供應商數目。	•   關鍵績效指標表現數據表
— 社會範疇

KPI B5.2	Description of practices relating to engaging suppliers, number of suppliers
where the practices are being implemented, how they are implemented
and monitored.	•     Product and Operation
— Supply Chain
Management
— Supplier Engagement

關鍵績效指標B5.2	描述有關聘用供應商的慣例，向其執行有關慣例的供應商數目、以及
有關慣例的執行及監察方法。	•   產品與營運
— 供應鏈管理
— 供應商參與

KPI B5.3	Description of practices used to identify environmental and social risks
along the supply chain, and how they are implemented and monitored.	•     Product and Operation
— Supply Chain
Management
— Environmental and Social
Risk Mitigation

關鍵績效指標B5.3	描述有關識別供應鏈每個環節的環境及社會風險的慣例，以及相關執
行及監察方法。	•   產品與營運
— 供應鏈管理
— 降低環境及社會風險