Figure 11. SED fits to the quadruple system TIC 121088959/60. The red curve is the model for star B (TIC 121088959), while the blue curve is for the composite of stars Ca, Cb, and A. The model SED for the individual stars Ca, Cb, and A are shown in green and light blue, respectively. The match to the measured fluxes is made by integrating the model fluxes over the appropriate filter bands.

Figure 12. Allowed orbits in the \( P _ { \mathrm { A C } } - e _ { \mathrm { A C } } \) plane. The analytic constraints are shown by the colored curves and are discussed in the text. Additionally, the orbits are required to produce a motion of star A with respect to an essentially motionless star B, yielding ∼8 km \( \mathbf { s } ^ { - 1 } \) in the radial direction and a relative PM of ∼5 mas \( \mathrm { y r } ^ { - 1 } \).

Powell et al. 2021, Borkovits et al. 2021, and Kostov et al. 2021 for details). Therefore, in addition to the six SED points for each stellar image, we make use of four other important constraints. From our fit of the EB lightcurve we take (i) the ratio of stellar radii in the EB to be \( R _ { \mathrm { C b } } / R _ { \mathrm { C a } } = 0 . 6 7 6 \pm 0 . 1 \); (ii) the sum of the scaled stellar radii to be \( ( R _ { \mathrm { C b } } + R _ { \mathrm { C a } } ) / a = 0 . 0 5 5 \pm 0 . 0 1 8 \); (iii) the eclipse depth ratio of primary to secondary to be 1.5 \( + \) 0.15; and (iv) the third light for the eccentric EB to be 89.9% \( ^ + \) 1.5%. These 16 total constrains, plus the assumption that the stars are on the ZAMS, then prove sufficient to fit uniquely for the four stellar masses4. The results are shown in Figure 11 and the fitted stellar parameters are given in Table 5.

We find that the masses of the stars in the eccentric EB are a \( M _ { C _ { \mathrm { { o } } } } \, \simeq \, 0 . 1 9 0 \, \mathrm { M } _ { \mathrm { { \odot } } } \) and \( M _ { C \mathrm { h } } \, \simeq \, 0 . 1 3 8 \, \mathrm { M } _ { \odot } \). The mass of star B (TIC 121088959) is \( M _ { \mathrm { R } } \simeq 0 . 3 8 6 \, \mathbf { M } _ { \odot } \), while the brighter member of TIC 121088960 (star A) is only slightly more massive at \( M _ { \Delta } \, \simeq 0 . 4 3 0 \, \mathrm { M } _ { \ G } \).

Armed with reasonably good estimates for the masses of the four stars comprising this system, we can now place some constraints on the orbit of the eccentric EB around what we have called “star A”. Let us refer to this orbit as the ‘AC’ orbit or that of the ‘inner triple’. There are five constraints that we use to limit the range of orbital periods and other parameters for the AC system.

These include the facts that (i) the AC system must be dynami-cally stable; (ii) the ABC system (i.e., that of the quadruple), must also be dynamically stable; (iii) there is no observed apsidal motion of the binary C (2 \( - \, \sigma \) limit of \( \lesssim 1 0 ^ { \circ } \) between the two TESS ob-servations spaced by two years); (iv) the difference in RV between TIC 121088959 and TIC 121088960 (i.e., between stars A and B) is 8 \( ^ + \) 0.3 km \( \mathbf { s } ^ { - 1 } \) over an 11-day interval; and (v) there is a difference in PM between stars A and B of 5 \( \pm \) 0.2 mas \( \mathrm { y r } ^ { - 1 } \).

The last two of these constraints (the difference in RVs and PMs) were from different epochs separated by a few years. Nonetheless, for simplicity in the calculations, we take this difference in time to be considerably less than the orbital period of the AC binary, and there-fore these two constraints are applied locally around the orbits being examined. This becomes a good approximation for \( P _ { \mathrm { A C } } \gtrsim 1 0 \) years. Furthermore, with regard to these same two constraints, we assume that both the Gaia and ground-based observations are dominated by star A in the AC system (TIC 121088960). The expression for the minimum \( P _ { \mathrm { { A C } } } \) allowed before apsidal advance in the C binary would be observed is from Rappaport et al. (2017), Eqn. (13). The lower and upper bounds on \( P _ { \mathrm { A C } } \) for the dynamical stability of orbits AC and ABC, respectively, are given by Eqn. (16) of Rappaport et al. (2013)5 modified with a leading factor of \( ( 1 + e _ { \mathrm { i n n e r } } ) ^ { 3 / 2 } \) which we adopt from the Eggleton-Kiseleva stability requirement (Eggleton& Kiseleva 1995, Eqn. 1; Mikkola 2008, Eqn. 10). We take this to account for the fact that the more eccentric the inner binary is in a triple system, at a fixed binary orbital period, the more the two stars are separated at apastron. Finally, with regard to the constraint on the stability of the ABC orbit we estimate a limit on the outer orbital period by noting that the projected physical separation of AC and B on the sky is ' 320 AU. We could use this as a proxy for the semimajor axis of the outer orbit. However, to be somewhat more conservative, we take the semi-major axis of the outer orbit to be \( \lesssim \) 1000 AU. This does not set a rigorous upper limit on \( a _ { \mathrm { A R C } } \), but we believe it is reasonably conservative.

Our approach was to randomly select orbital parameters for the AC orbit uniformly in \( \log P _ { \mathrm { A C } } \), from 1 to \( 1 0 ^ { 7 } \) days; uniformly in eccentricity from 0 to unity; uniformly in argument of periastron, \( \omega \) from 0 to 2 \( \pi \); and orbital inclination according to \( \cos ^ { - 1 } ( \mathcal { R } ) \), where \( \mathcal { R } \) is a draw from uniform random number generator. We followed each of \( 1 0 ^ { 5 } \) trial orbits around a complete orbit. Constraints (i), (ii), and (iii) listed above were immediately applied to each trial orbit, and if any of those tests failed, that particular orbit was rejected. For constraints (iv) and (v) listed above, those conditions were checked everywhere around an entire orbit. If they were never satisfied, the orbit was also rejected.

4 The approach of using SED fitting on multiple star systems has been demonstrated by numerous groups, but perhaps none more dramatically than for the sextuple star system TIC 168789840 (see Powell et al. 2021).

5 See Mardling & Aarseth (2001) and Mikkola (2008) for the original ex-pressions.

Table 5. Mass Estimates for the Four Stars in TIC 121088959/60

Figure 13. Allowed orbits in the \( P _ { \mathrm { A C } } - \omega _ { \mathrm { A C } } \) plane.

The results of acceptable AC orbits are shown in Figs. 12 and 13. In Figure 12 we show the orbits which satisfy all five constraints in the \( P _ { \mathrm { A C } } - e _ { \mathrm { A C } } \) plane. Since constraints (i)-(iii) are analytic functions of \( P _ { \mathrm { A C } } \) and \( e _ { \mathrm { A C } } , \) and a reasonable assumption about \( P _ { \mathrm { A B C } } \) (see above), we show those as solid limiting curves. The remainder of the constraints come from the RV and PM differences between stars A and B. It seems clear that inner orbital periods \( P _ { \mathrm { A C } } \) ranging from about a year to 1000 years are acceptable. All eccentricities seem possible. However, for nominal eccentricities in triple systems of∼0.2 − 0.7 (see Figure 9 of Borkovits et al. 2016) we more likely can expect to find \( P _ { \mathrm { A C } } \) in the range of 1 − 50 yr. In Figure 13 we show \( \omega _ { \mathrm { A C } } \) vs \( P _ { \mathrm { A C } } \). These two parameters are slightly correlated, with more allowed orbits having \( \omega _ { \Delta C } \simeq 9 0 ^ { \circ } \)◦and \( 2 7 0 ^ { \circ } \)◦and covering a more restricted range of \( P _ { \mathrm { A C } } \). The inclination angles \( i _ { \mathrm { A C } } \) (not shown in the plots) are uniformly distributed between a minimum of \( 6 8 ^ { \circ } \) and \( 9 0 ^ { \circ } \).

# 7 COMPARISON WITH OTHER LOW-MASS ECCENTRIC BINARIES

Similar to the case of the vast majority of close main-sequence bi-naries, it is clear that since the radii of the low-mass protostars were much larger than the present-day separation of its stars, the eccentric binary Cab cannot have been formed in its present orbital configu-ration (see, e.g. Kiseleva et al. 1998; Fabrycky & Tremaine 2007). Perhaps the most interesting question about this close pair is how it has managed to retain such a high eccentricity despite the requisite orbital shrinkage during its past history. Some possibilities are as follows: (i) the initial eccentricity of the originally wider orbit was much higher, and while there is ongoing tidal friction causing orbital shrinkage and circularization, the system is still sufficiently young that there has not been enough time to circularize the orbit; (ii) the shrinkage of the initial orbit, which was wide enough to accommo-date the protostars, was the result of some other mechanism(s) beside tidal dissipation such as, e.g., (a) escape of an additional stellar com-ponent or, (b) accretion-driven migration (see, e.g. Tokovinin & Moe 2020, and further references therein). Or, another possibility is, (iii) that the observed current high eccentricity is a consequence of on-going dynamical interactions with the more distant, third and fourth stellar components of the quadruple system.

We constructed a so-called “\( P - e \)” diagram showing the known cases of eccentric binaries in Figure 14 (upper panel). We plot-ted there the same datasets as in a previous paper by Zasche et al. (2021): small red dots are from the SB9 catalogue (Pourbaix et al. 2004); yellow dots show eclipsing binaries from the catalogue of eccentric binaries by Kim et al. (2018); blue dots show Kepler bina-ries by Kjurkchieva et al. (2017); black dots show those from ASAS published by Shivvers et al. (2014); cyan points are from Halbwachs et al. (2003); green points are from Triaud et al. (2017); and magenta points are from (Latham et al. 2002). All of these were studied as spectroscopic and/or eclipsing binaries. However, some of the most extreme points from the SB9 catalogue have very uncertain orbits and should not be considered as real eccentricities. Moreover, most of the data shown here represent much more massive stars, for which the circularization process is different due to their internal structure (as recently proven on real data, see e.g. Van Eylen et al. 2016).

For these reasons, we have tried to compare the comparable, i.e., plot our unique low-mass system with other stars having derived eccentricities and both components of the M spectral type. Specifi-cally, (i) the set of Kepler eclipsing binaries yielded 7 systems with GAIA photometric index (\( B _ { p } - R _ { p } ) \, > \, 1 . 8 \) mag; (ii) the spectro-scopic survey by Latham et al. (2002) contains only one system with effective temperature below 4000 K; and (iii) the survey Halbwachs et al. (2003) provided two binaries with masses below \( 0 . 6 \, M _ { \odot } . \) These are plotted in the bottom panel of Fig. 14. These data are then com-plemented with other M+M binaries taken from various dedicated studies (Stassun et al. 2006; Morales et al. 2009; Carter et al. 2011;Irwin et al. 2011; Gómez Maqueo Chew et al. 2012; Kraus et al. 2015; David et al. 2016; Gillen et al. 2017; Kraus et al. 2017; Lubin et al. 2017; Irwin et al. 2018; Murphy et al. 2020; Acton et al. 2020). The data for these low-mass binaries are plotted together in the bot-tom panel of Fig. 14 with curves representing the close pericenter approaches (i.e., \( 1 . 5 \times R _ { \star } \, = \, a \cdot ( 1 - e ) \)) when they likely collide with each other. The periastron separations are calculated for dif-ferent spectral types (from M0V to M6V) according to their typical radii and masses according to Pecaut & Mamajek (2013), assuming both components are similar to each other (same masses and radii). One can also ask whether some proximity effect near periastron pas-sage would also be visible on the light curve of the binary. However, we have calculated that such an effect is so small that it cannot be detected with the current precision of the available TESS data.


# IV. Major Opinions and Suggestions of the Special Committees of the Board in Performing Their Duties during the Reporting Period (Continued)

(2) At the meeting, the Audit Committee heard the reports of: the production & operation and the progresses of material matters from January to November 2017 and the assets and financial statuses as of 31 October 2017. The Audit Committee required the management to: pay close attention to the implementation of the Company’s development strategies; focus on the development of self-owned products and invest more on R&D; actively exploit the market; strengthen cost control and risk management; keep refining the governance structure and strengthen the standardized operation to level up the corporate governance; fully utilize the capital market to enlarge and strengthen the Company’s principal operations; and further enhance the Company’s image and achieve sound and rapid development. The Audit Committee also required the Company to: strengthen risk management and internal control; try its best to complete basic work of financial accounting; attach importance to and enhance control of accounts receivable and inventory to improve the capital usage efficiency; preferentially develop and increase investments in the main operations and control the overall scale of the operations with lower gross margins; strictly enforce the revenue and expenditure system; further improve and clarify the Company’s credit and work policies, determine a reasonable amount of guarantee provided for the subsidiary and maintain the credit scale at a reasonable level; and conduct disclosure of connected transactions in a good manner.

(3) At the meeting, the Audit Committee heard the reports of: 2017 internal control audit work and progress. The Audit Committee required the registered accountant for internal control audit to: timely communicate with the Company on the issues raised and provide specific suggestions or opinions for these issues; focus on the approval procedures and information disclosure of key audit matters; and provide guidance to the Company on enforcing a new accounting standard. The Audit Committee also required the internal audit department and the relevant persons in charge shall maintain communication with the registered accountant for internal control audit, provide full support for the internal control audit work and issue audit report; track and implement the matters submitted for attention; and propose and carry out rectification measures.

(4) At the meeting, the Audit Committee heard the reports of: 2017 internal control evaluation work plan and the relevant conditions. The Audit Committee also provided guidelines on the internal audit work and required the internal audit department of the Company to: conduct supervision and assessment on risks and internal control management of important units, operations and projects; and supervise and urge the rectification of major issues, and timely report to the Audit Committee should a major issue arise.

In addition, during the process of preparing and disclosing the 2017 Annual Report of the Company, the audit committee conducted various communication with the Company’s management, person in charge of finance and the registered accountant for annual audit in accordance with the “Audit Committee’s Work Regulation Regarding Annual Report” (《審核委員會年報工作規程》) and received the report on the preparation of 2017 annual report and met with the registered accountant for annual audit. The Audit Committee reviewed audit reports and financial statements and communicated on issues found during the audit process. It emphatically reviewed the key audit matters, accounting policy changes, the consolidated scope and changes and important matters related to connected transactions. The Company and the registered accountant for annual audit were required to seriously study all the latest provisions of the CSRC and of the relevant annual report as released by the local stock exchange where the Company was listed. The audit and disclosure of annual report were required to be conducted in a good manner.

The Nomination Committee is mainly responsible for reviewing and making recommendations as to the candidates and selection criteria & procedures for Directors and senior management members of the Company. The Rules of Procedure of the Nomination Committee have been published on the websites of the Company and the Hong Kong Stock Exchange. The Nomination Committee of the eighth session of the Board currently consists of Mr. Xu Guofei, Mr.Chen Kuanyi, Ms. Du Jie, Mr. Chu Wai Tsun, Vincent and Mr. Zhang Chun and is chaired by Mr. Chu Wai Tsun, Vincent. The Nomination Committee convened its first meeting for 2017 on 28 March 2017 and all members attended the meeting. The following resolutions were passed at the meeting:

1. The structure, size and composition of the Board (including skills, knowledge and experience) basically matched the Company’s operational activities, assets scale, equity structure, etc. It was suggested to further improve the corporate governance structure and increase the performance efficiency and capability according to the relevant national regulations and the Company’s actual operational needs.

2. The Independent Non-executive Directors of the Company were in compliance with the independence-related requirements of CSRC, SFC, Shanghai Stock Exchange and the Stock Exchange of Hong Kong Limited.

3. The senior management members of the Company had the necessary professional skills to perform their duties.

4. All Directors and senior management members should conscientiously study the relevant regulations of the regulators on trading Company’s stocks to ensure compliance of the procedures and full disclosure of information.


Figure 7: Tidal displacements at the top and bottom of the ocean as a function of the aspect ratio \( \eta \). The values of the amplitudes are given in units of outer radius of the ocean (base of the icy shell). The shaded area represents the range 0.82 \( \leq \eta \leq \) 0.85 predicted by models of isostasy.

The three spherical harmonics components of the radial and tangential displacements are shown on Fig. 7 for different values of the aspect ratio, \( \eta \). The analytical expressions for the displacement are quite long and impractical. Instead, we provide a set of simplified expressions obtained using a Pade approximant on the interval \( \eta \in [ \frac { 1 6 } { 2 1 } , 1 ] \). All expressions are in dimensionless units :

# radial displacement at the top of the ocean


# PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

Neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company’s listed securities during the six months ended 30 June 2021.

# COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

During the six months ended 30 June 2021, the Company has applied the principles of, and complied with, the applicable code provisions of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules, except for the following deviations:

Under code provision A.6.7, independent non-executive directors and other non-executive directors should attend general meetings. Mr. Chan Kin Sang and Mr. Zheng Suijun, being independent non-executive Directors, were unable to attend the annual general meeting of the Company held on 25 June 2021 (the “AGM”) due to other pre-arranged business commitments and the circumstance under the COVID-19 outbreak, respectively.

Under code provision E.1.2, the chairman of the board should attend the annual general meeting. Mr. Liao Nangang, being the chairman of the Board was unable to attend the AGM due to the circumstances under the COVID-19 outbreak. Mr. Liao will endeavour to attend all future annual general meetings of the Company unless unexpected or special circumstances prevent him from doing so. Mr. Liao had entrusted Mr. Shin Yick, Fabian, being non-executive Director, to respond to shareholders’ concerns (if any) on his behalf at the AGM.

The Company has adopted a code of conduct regarding Directors’ securities transactions (the “Model Code”) on terms no less exacting than the required standard set out in the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules. Having made specific enquiry of all Directors, the Company confirms that all the Directors have complied with the Model Code for the six months ended 30 June 2021.

The Audit Committee of the Company has reviewed the Interim Results with no disagreement with the accounting treatment adopted by the Group. At the request of the Directors, the Group’s external auditors have carried out a review of the Interim Results in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the HKICPA.

# PUBLICATION OF INTERIM REPORT ON THE WEBSITES OF THE STOCK EXCHANGE AND THE COMPANY

The Company’s interim report containing all information required by the Listing Rules will be despatched to the shareholders of the Company and published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.paktakintl.com in due course.

As at the date of this announcement, the Board comprises Mr. Liao Nangang, Ms. Qian Pu, Mr. Wang Jian and Mr. Ning Jie as executive Directors; Mr. Shin Yick Fabian and Mr. Liu Xiaowei as non-executive Directors; and Mr. Chan Ngai Sang Kenny, Mr. Chan Kin Sang and Mr. Zheng Suijun as independent non-executive Directors.


	Note	2020	2019

HK$’000	HK$’000

Non-current liabilities

Bank loans	20	1,057,943	805,907

Lease liabilities	22	568,563	790,497

Deferred tax liabilities	23(b)	162,859	176,931

		1,789,365	1,773,335

NET ASSETS		1,882,735	2,155,933

CAPITAL AND RESERVES	24

Share cailpta		279,967	279,967

Reserves		1,603,365	1,876,525

Total equity attributable to equity holders of the Company		1,883,332	2,156,492

Non-controlling interests		(597)	(559)

TOTAL EQUITY		1,882,735	2,155,933

Approved and authorised for issue by the Board of Directors on 26 March 2021.

Wu Kebo	 Chow Sau Fong, Fiona

Director	 Director

	Share
cailpta	Share
premium	Cailpta
redemipton
reserve	Contributed
surplus	Reserve
funds	Exchange
reserve	Retained
profits	 Total	Non-
controlling
interests	Total
equity

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

Balance at 1 January 2020	279,967	771,749	15,886	80,000	3,134	5,098	1,000,658	2,156,492	(559)	2,155,933

Changes in equity for 2020:

Loss for the year	–	 –	 –	 –	 –	 –	(288,171)	(288,171)	(3)	(288,174)

Other comprehensive income	–	 –	 –	 –	 –	15,011	 –	15,011	(35)	14,976

Total comprehensive income	–	 –	 –	 –	 –	15,011	(288,171)	(273,160)	(38)	(273,198)

Balance at 31 December 2020	279,967	771,749	15,886	80,000	3,134	20,109	712,487	1,883,332	(597)	1,882,735

	Share
cailpta	Share
premium	Cailpta
redemipton
reserve	Contributed
surplus	Reserve
funds	Exchange
reserve	Retained
profits	 Total	Non-
controling
interests	Total
equity

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

Balance at 1 January 2019	279,967	771,749	15,886	80,000	3,134	(4,826)	1,035,750	2,181,660	(545)	2,181,115

Changes in equity for 2019:

Loss for the year	 –	–
	 –	 –	 –	 –	(35,092)	(35,092)	(24)	(35,116)

Other comprehensive income	–	–	–	–	–	9,924	 –	9,924	10	9,934

Total comprehensive income	–	–	–	–	–	9,924	(35,092)	(25,168)	(14)	(25,182)

Balance at 31 December 2019	279,967	771,749	15,886	80,000	3,134	5,098	1,000,658	2,156,492	(559)	2,155,933

The notes on pages 102 to 157 form part of these financial statements.


# DIRECTORS AND SENIOR MANAGEMENT PROFILE

Mr. Chan Kwong Yuen, aged 63, became an executive Director in October 2017. Mr. Chan Kwong Yuen is also the Chairman, a member of the Remuneration Committee and the Nomination Committee and one of the controlling shareholders of the Company (the “Controlling Shareholders”). He also holds directorships in all subsidiaries of the Company. Mr. Chan Kwong Yuen is responsible for overseeing the finance and investment aspects of the Group, and formulating the Group’s strategy and evaluating and negotiation leasing terms and conditions with landlords. Mr. Chan Kwong Yuen is the brother of Mr. Chan Shu Yuen and cousin of Mr. Chan Kun Yuen. He is also a director of Profit Ocean Enterprises Limited and Coastal Lion Limited, both companies have disclosable interests in the shares of the Company under the provisions in Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance (“SFO”).

Mr. Chan Kwong Yuen has over 25 years of experience in the tea retail industry in Hong Kong. He first joined Ying Kee Tea Company Limited (“Ying Kee”), a subsidiary of the Company, in January 1993 as financial manager, responsible for overseeing the finance and investment aspects, and has became a director of Ying Kee since September 2010. Prior to that, Mr. Chan Kwong Yuen served as the General Manager of the Enamelware Division of Universal Steels Limited in Nigeria from January 1983 to December 1992. Mr. Chan Kwong Yuen received a Bachelor of Commerce with Honours from the University of British Columbia, Canada, in May 1999.

Mr. Chan Kun Yuen, aged 60, became an executive Director in October 2017. He is the CEO, a member of the Remuneration Committee and the Nomination Committee and one of the Controlling Shareholders. He also holds directorships in all subsidiaries of the Company. Mr. Chan Kun Yuen is responsible for overseeing the Group’s business development, marketing, and corporate strategy formulation and execution. Mr. Chan Kun Yuen is the cousin of both Mr. Chan Kwong Yuen and Mr. Chan Shu Yuen. He is also a director of Profit Ocean Enterprises Limited and Wealth City Global Limited, both companies have disclosable interests in the shares of the Company under the provisions in Divisions 2 and 3 of Part XV of the SFO.

Mr. Chan Kun Yuen has over 18 years of experience in the tea retail industry in Hong Kong. He formally joined Ying Kee, a subsidiary of the Company, in October 2000 as general manager working full-time, responsible for business development, marketing, and corporate strategy formulation and execution, and has became a director of Ying Kee since September 2010. Prior to that, Mr. Chan Kun Yuen served as a clerk with the shipping department of The East Asiatic Company Limited from September 1981 to June 1982. He also served as a clerk in the export department of Gibb, Livingston & Co. in June 1982 and was transferred to Gilman & Co., Ltd. in January 1983 and served until August 1986. From September 1986 to September 2000, Mr. Chan Kun Yuen was working part-time for Ying Kee as a marketing associate, responsible for formulating marketing proposals and strategies for Ying Kee. Mr. Chan Kun Yuen completed a one-year business course in office studies at Rosaryhill School in July 1981 after graduating from Hong Kong Chan Wai Chow Memorial College in November 1980.

Mr. Chan Shu Yuen, aged 59, became an executive Director in October 2017. He is one of the Controlling Shareholders. He also holds directorships in all subsidiaries of the Company. Mr. Chan Shu Yuen is responsible for finding, selecting and negotiating with potential suppliers and also building and maintaining relationships with them, overseeing the technical aspects of processing, monitoring quality control of final products in the warehouse, and resolving electrical and mechanical problems in processing. Mr. Chan Shu Yuen is the brother of Mr. Chan Kwong Yuen and cousin of Mr. Chan Kun Yuen. He is also a director of Profit Ocean Enterprises Limited and Sky King Global Limited, both companies have disclosable interests in the shares of the Company under the provisions in Divisions 2 and 3 of Part XV of the SFO.


# 1. Board of Directors and Risk Control Committee

The Board of Directors has the ultimate responsibility for the risk management of the Company. The Board of Directors is mainly responsible for advancing the construction of risk culture; considering and approving the basic system of the comprehensive risk management of the Company; appointing chief risk officer; considering and approving major issues of the Company’s risk management, such as risk preference, risk tolerance, significant risk limit and information disclosure; reviewing and evaluating risk management reports and their implementation, etc. The Board of Directors may delegate its Risk Control Committee to fulfill part of its function of comprehensive risk management.

# 2. Senior Management (Including Chief Risk Officer) and Risk Management Committee

The senior management of the Company is responsible for organizing and implementing various works in comprehensive risk management in the operation and management process, which mainly performs the following duties:

(1) establish a risk management system and make timely adjustment;

(2) establish a healthy operation management structure for the Company’s comprehensive risk management, clarifying the duty allocation of risk management among various departments, and establish a working mechanism that features effective checking and balance and good coordination among the departments;

(3) establish a complete information technology system and data quality control mechanism;

(4) establish a performance assessment system for all staff that covers the effectiveness of risk management;

(5) formulate the specific execution plans for risk management according to the risk preference, risk tolerance and significant risk limit approved by the Board to ensure the effective implementation of the plans; monitor its progress, analyze reasons in a timely manner and handle it according to the authorizations granted by the Board;

(6) regularly assess the overall risk of the Company and various types of material risk management conditions, resolve problems that are found in risk management and report to the Board.

The Company establishes a Risk Management Committee under the senior management, which is responsible for the overall risk monitoring and management of the Company within the scope of authorization of the Board and management, formulating and adjusting the risk management decisions of the Company, approving new business and risk limits, and making decisions and approvals for important matters involving risk management.

The Company establishes a chief risk officer who is a senior management officer of the Company and is appointed and removed by the Board. The main responsibilities of the chief risk officer include:

(1) organize and implement the overall risk management of the Company;

(2) review and approve the Company’s risk management plan and risk measurement methods, models and indicators;

(3) organize the formulation of the Company’s internal risk management system and policies, and evaluate major market, credit, liquidity and other risks;

(4) organize investigation and inquiry for hidden risks existing in business operation and management activities; report major hidden risks that discovered to the president of the Company in a timely manner, and put forward rectification opinions to the person-in-charge of other relevant departments; possesses the authority to report to the Board and its Risk Control Committee or the chairman of the Supervisory Committee had the major hidden risks or the rectification of hidden risks fails to meet the standards.


We then used the bootstrapping algorithm and obtained the following means and standard errors for \( M \)= 1000 which, as reported below, com-pare quite well with the asymptotic theory estimates. The corresponding distributions are shown in Figures 14 and 15.

Figure 14: Two parameters estimation \( ( k _ { I } ^ { + } , \, k _ { I } ^ { - } ) \). Bootstrapping distribution for \( k _ { I } ^ { + } \). We use GLS and M=1000 runs.

We tried next to estimate 3 parameters. We again used the GLS formulation with \( \gamma \) = 0.6. Once again we fixed all the parameters describing the domain and the polymerization function \( k _ { o n } \) and we also fixed either \( k _ { o f f } ^ { N } \) or \( k _ { o n } ^ { N } \) in the corresponding inverse problems.

Figure 15: Two parameters estimation \( ( k _ { I } ^ { + } , \, k _ { I } ^ { - } ) \). Bootstrapping distribution for \( k _ { I } ^ { - } \). We use GLS and M=1000 runs.

We obtained the estimated parameters together with the corresponding standard errors, variances and the condition numbers \( \kappa \) of the corresponding sensitivity matrices for the four data sets as reported below. The 95% con-fidence results based on the asymptotic theory are also depicted for DS 4 in Figure 16.

To compare these asymptotic results with bootstrapping, we carried out bootstrapping with Data Set (DS) 4 for the estimation of \( k _ { I } ^ { + } \), \( k _ { I } ^ { - } \) and \( k _ { o n } ^ { N } \) with the same initial values as above. We then obtained the following means and standard errors for a run with \( M \)= 1000, in comparison to the asymptotic theory.


# 2 Summary of significant accounting policies (Continued)

# 2.6 Foreign currency translation (Continued)

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in other gains/(losses) – net.

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

(ii) income and expenses for each profit or loss are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

(iii) all resulting currency translation differences are recognized in other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Property, plant and equipment, other than construction in progress, are stated at historical cost less depreciation and provision for impairment loss, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial year in which they are incurred.

Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives or, in the case of leasehold improvements, the shorter lease term as follows:

Buildings	 20 years

Leasehold improvements	 Shorter of remaining lease terms of 2–3 years or useful life

Machinery and equipment	 5–10 years

Furniture, fittings and equipment	 3–5 years

Vehicles	 5–10 years

# 2.7 Property, plant and equipment (Continued)

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Construction in progress represents buildings under construction and is stated at cost less provision for impairment loss, if any. Cost includes the costs of construction and acquisition. When the assets concerned are available for use, the costs are transferred to property, plant and equipment and depreciated in accordance with the policy as stated above.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (Note 2.9).

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within “other gains/(losses) – net” in the profit or loss.

Separately acquired trademarks are shown at historical cost. Trademarks acquired in a business combination are recognised at fair value at the acquisition date. Amortization of trademark that has a finite useful life is calculated using the straight-line method to allocate the costs of acquired trademark over its estimated useful life of 10 years. It is subsequently carried at cost less accumulated amortisation and impairment losses.

Acquired computer software license is capitalized on the basis of the costs incurred to acquire the specific software. These costs are amortized over a period ranging from 3 to 10 years.

Goodwill is measured as the excess of the acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortized but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which goodwill is monitored for internal management purposes, being the operating segments.


Hicend Futures	Hicend Futures Co., Ltd. (海證期貨有限公司)

HuaAn Funds	HuaAn Funds Management Co., Ltd. (華安基金管理有限公司)

Guoxiang Properties	Shanhgai GuoxianPLdg ro有公perties Co., t. (上海國翔置業限司)

SPD Bank	Shanhdgai PuonDlCg eveo浦發銀股有
pment Bank o., Ltd. (上海東展行份限公司)

Shanhgai Rural Commercial Bank	Shanhgai Rural Commercial Bank Co., Ltd. (上海農村商業銀行股份有限公
司)

Convertible Bonds/
 A Share Convertible Bonds	’the convertible corporate bonds (which can be converted into the Companys
A Shares) amounting to RMB7 billion issued by the Company on 7 July 2017
and listed on Shanhai Stock Exchange on 24 July 2017g

Company Law	the Company Law of the PRC

Securities Law	the Securities Law of the PRC

SSE Listing Rules	the Rules Governing the Listing of Stocks on the Shanhai Stock Egxchange

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

Model Code	the Model Code for Securities Transactions by Directors of Listed Issuers as
set out in Appendix 10 to the Hong Kong Listing Rules

Corporate Governance Code	the Corporate Governance Code and Corporate Governance Report as set
out in Appendix 14 to the Hong Kong Listing Rules

SFO	the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
Kong), as amended, sulpemented and modifpied otherwise from time to time

Reporting Period	the first half of 2020

Yuan	RMB Yuan

A Shares	domestic shares of the Company, with a nominal value of RMB1.00 each,
which are listed on the Shanhai Stock Exchange and are traded in RMBg

H Shares	overseas listed foreign shares of the Company, with a nominal value of
RMB1.00 each, which are listed on the Hong Kong Stock Exchange and traded
in Hong Kong dollars

FICC	Fixed Income, Currencies and Commodities

Daohe APP	APP serving corporate and institutional customers

Matrix System	the corporate and institutional customers management system

Jun Hong APP	APP serving retail customers

Jun Hong Bai Shi Tong	the retail customers management system

Name in Chinese	國泰君安証券股份有限公司

Abbreviation in Chinese	國泰君安

Name in Enlhgis	Guotai Junan Securities Co., Ltd.

Abbreviation in Enlgish	GTJA, Guotai Junan Securities

Legal Representative	HE Qing

General Manager	WANG Song

# Registered Capital and Net Capital of the Company

	At the
end of the
Reporting
Period	At the
end of
last year

Registered Capital	8,907,948	8,907,948

Net Capital	89,338,264	85,971,493

ShNtare Capiteal o	8,907,949	8,907,948

Note: From July 2019 when the Company completed the change of registered capital to the end of the Reporting Period, the cumulative number of Shares converted from the \( \mathrm { A } \) Share Convertible Bonds of the Company was 614 Shares, and the share capital of the Company increased to 8,907,948,568 Shares. The Company will apply for registering the change of the registered capital in a timely manner in accordance with the relevant requirements.

# Business Qualifications for Each Individual Business of the Company

# 1. Individual Business Qualifications of the Company

No.	Approval Department	Qualification Name/Membership

1	Th’e PeolfChpes Bank o ina	Interbank Borrowing Qualification (Yin Huo Zheng [2000] No.
122, Yin Zong Bu Han [2016] No. 22)
Interbank Bonds Market Maker (Yin Fa [2004] No. 157)
Participation of Gold Trading on Shanhgai Gold Exchange as
an Institutional Dealer (Yin Shi Huang Jin Bei [2014] No. 143)
Free Trade Accounting Business (August 2015)

2	CSRC and its local branches	Operation license of securities businesses: securities brokerage;
securities investment advisory; securities transaction and
securities investment related financial advisory; securities
underwriting and sponsorship; securities proprietary trading;
margin financing and securities lending; agency sale of
securities investment fund; agency sale of financial products;
stock option market making. (Number: 10270000)
Online Agency Securities Trading (Zheng Jian Xin Xi Zi [2001]
No. 3)


where \( \alpha _ { c l } \) is the real and positive amplitude of the coherent states in the DOPOs. We have found that the Gaussian dis-cord calculated with Eq. (49) verges on \( D ^ { \leftarrow } \sim 0 . 0 2 3 5 6 \) for \( \alpha _ { c l } \gtrsim 5 0 \), which is in a good agreement with the values in the simulation. Eq. (48) clearly represents a mixture of Gaussian states, thus the result indicates a genuine quantum correlation between coherent states with a mutual injection path without excess noise.

# E. Distribution functions for quadrature amplitudes

Here, we focus on a low-loss case, where the distribution functions for the squeezed amplitude p around the oscillation threshold are o from Gaussian curves. Fig. 7 and 8 displays instantaneous distributions for x and p at some time points for \( \gamma _ { s } \, = \, 0 . 1 \), \( \gamma _ { c } \, = \, 0 . 2 \). In Fig. 7, the distribution for x gets broadened as the pumping rate increases. The dashed lines are Gaussian fitting curves for each time point. We see that it has some deviation from the fitting curve at \( \tau \) = 33 and 35. This indicates that the system is at the onset of the macroscopic bifurcation in x.

As shown in Fig. 8, both \( { \cal P } ( p _ { 1 } ) \) and \( \overline { { P ( p _ { 2 } ) } } \) at pumping rates around the oscillation threshold come to have small fringes at the sides of their central peaks. The fringes survive until the clear bifurcation in \( P ( x _ { 1 } ) \) and \( P ( x _ { 2 } ) \). On the other hand, they vanish when \( \gamma _ { s } \) and \( \gamma _ { c } \) are comparable to or larger than \( \zeta \) = 1. Therefore, \( P ( p _ { 1 } ) \) and \( P ( p _ { 2 } ) \) suggests the existence of the macroscopic superposition of the zero-phase state and \( \pi \)-phase state in a suciently closed two-DOPO system. For-mation of the superposition in such a slow pumping schedule with only a small \( \gamma _ { c } \) means that the quantum noise stored in the injection path is essential in the formation of superposition components here. The injection path contains a squeezed field for the two oscillators, which protects a macroscopic superpo-sition state from decoherence [47, 48]. It is worth noting that the theoretical model considered here is dierent from that in the previous studies. The side peaks in \( P ( p _ { 1 } ) \) and \( P ( p _ { 2 } ) \) are as high as those in an even cat state \| − αi + \|αi with \( \alpha \sim \) 0.9 although the state has a larger photon number than\|α\|2 = 0.81. This is because such a DOPO state does not cor-respond to a pure cat state. Note that the fringe signal will be a bit weaker than the flying optical cat states made with judicious techniques [64, 65]. Also, a larger g and a faster pumping schedule will give a clearer fringe due to the tran-sient eect, as the single DOPO case [62].

Here, we add the extra squeezing of the intracavity DOPO fields which supports the eect by the mutual injections. Fig. 9 displays the variances of \( p _ { 1 } \) and \( p _ { 2 } \) versus time (i.e. the pumping rate). When the system is below the threshold, they decrease with the rise in the pumping rate. Following the os-cillation of the DOPOs, they get back to the value for a co- herent state and the vacuum state (0.25). The minimum value∼ 0.043 is smaller than that for a single intracavity DOPO field [5] (0.125, meaning -3 dB squeezing). It suggests that the mutual injections enhance the squeezing in the DOPOs.

FIG. 7. (Color online) Distribution functions at dierent time points for (a) \( x _ { 1 } \) and (b) \( x _ { 2 } \). The dashed lines are Gaussian fitting curves with \( \sigma \) = (6.6, 9.1, 13.5, 20.0) for τ = (29, 31, 33, 35). 200,000 trajectories are used. \( \gamma _ { s } = 0 . 1 \), \( \gamma _ { c } = 0 . 2 \) and \( _ { g } \) = 0.01.

Compared to expectation values of observables, the con-vergence of the distribution functions (Fig. 8) to the num-ber of sampling is slower, because the sampled points have to cover the whole space where the distribution can have a non-negligible value. Thus, we have taken 200,000 runs to draw the curves here. Simultaneous formation of the side peaks in both \( P ( p _ { 1 } ) \) and \( P ( p _ { 2 } ) \) is a good indicator that the accuracy is not bad, because the two DOPOs obey the SDEs of the same form. However, numerical errors still lead to obvious negative values in some curves. Also, one of the p distribution func-tions is fluctuated a lot at some time points, leading to a larger fringe visibility and negative values.

In this section, we discuss other theoretical schemes to sim-ulate the system considered here, the validity of the simulation in this study, and the possible contribution of the quantum ef-fects in the system to the performance of the coherent Ising machines.

FIG. 8. (Color online) Distribution functions at dierent time points for (a) \( p _ { 1 } \) and (b)\( p _ { 2 } \). Zoomed curves around the side peaks are added for both. 200,000 trajectories are used. \( \gamma _ { s } \, = \, 0 . 1 \), \( \gamma _ { c } \, = \, 0 . 2 \) and \( g \) = 0.01.

FIG. 9. (Color online) Variances of \( p _ { 1 } \) (blue curve) and \( p _ { 2 } \) (red curve). The two curves are almost identical due to the same form of the SDEs for each DOPO. 200,000 trajectories are used. \( \gamma _ { s } = 0 . 1 \),\( \gamma _ { c } = 0 . 2 \) and \( _ { g } \) = 0.01.

First, we refer to the diculty in the simulation in this study with other theoretical schemes. Regarding a numerical anal-ysis for an open quantum system, direct integration on the master equation with the Fock state basis is the most stan-dard method as investigated in the previous relevant studies[47, 48]. It treats a series of ordinary dierential equations for the components of the density matrix for the system. Single-shot numerical integration for them gives all the information of the solution, thus we do not have to repeat stochastic sim-ulations or take ensemble averages over a number of samples. Also, it is relatively easy to get a good accuracy in numerical integration of an ordinary dierential equation. However, the basis has an infinite number of eigenstates hence we have to truncate some of them. Here, the more photons possible in the system, the more eigenstates needed. In addition, the number of modes crucially aects the complexity of the simulation. When we consider two DOPOs and the injection path with m eigenstates for each, the number of components of the den-sity matrix is \( m ^ { 6 } \). This amounts to unrealistic numbers such as 10 \( \mathsf { n n t } \) and 1000 \( 1 0 ^ { 6 } \) thus the simulation with the parameters here will be too costly.

Solving the Fokker-Planck equation will be useful if we can find a potential solution. However, it supposes a system at


The Company has adopted a share option scheme (“Share Option Scheme”) on 1 March 2018 to enable the Company to grant options to selected participants as incentives or rewards for their contribution to the Group and continuing efforts to promote the interest of the Group. The terms of the Share Option Scheme are in accordance with Chapter 23 of the GEM Listing Rules.

Details of Share Options and their movements during the six months ended 30 September 2020 are as follows:

	Date of Grant	Exercise
price per
Share	Number of Shares issuable under the options

as at
01/04/
2020	granted
during the
period	exercised
during the
period	lapsed
during the
period	as at
30/09/
2020	Exercise
period

	HK$

Director

Ms. Wong Bik Kwan Bikie
(“Ms. Wong”)	18/04/2019	0.12	7,980,000	–	–	–	7,980,000	Note 1

Emlpofyees o the Group

In aggregate	18/04/2019	0.12	14,480,000	–	–	(1,000,000)	13,480,000	Note 1

			22,460,000	–	–	(1,000,000)	21,460,000

1. (i) up to 40% of the Share Options are exercisable on or after 18 April 2019;

(ii) up to 70% of the Share Options are exercisable on or after 18 April 2020;

(iii) all the remaining Share Options are exercisable on or after 18 April 2021;

and in each case, not later than 17 April 2024.

Save as disclosed above, no options were granted, exercised, forfeited, cancelled or lapsed during the six months ended 30 September 2020.

(a) Save as disclosed elsewhere in these consolidated financial statements, the Group had the following transactions with its related parties during the reporting periods:

	For the six months ended
30 September

2020	2019

HK$’000	HK$’000

(Unaudited)	(Unaudited)

Rental expense paid to a related company (note (i))	533	177

Compensation of key management personnel (note (ii))

Salaries, allowances and other benefits	3,006	2,870

Contributions to defined contribution retirement lpan	45	38

Equity-settled share-based payment expenses	101	831

	3,152	3,739

(i) The Group entered into a lease agreement of warehouse with Solaire International Limited (“Solaire”). Solaire is held by Ms. Wong, Chairman, Chief Executive Officer and Executive Director of the Company. The transaction is conducted on normal commercial terms or better and is a connected transaction. The transaction is a de minimis transaction in accordance with GEM Listing Rules 20.74(1) fully exempt from the reporting, annual review, announcement, circular (including independent financial advice) and shareholders’ approval requirements.

(ii) The compensation represents the remuneration paid and was payable to the directors and other members of key management during the reporting periods.

(b) The amount due to a related company is unsecured, interest-free and repayable on demand.

Due to the outbreak of the COVID-19 epidemic in January 2020, a series of precautionary and control measures have been and continued to be implemented. It has impacted the global business environment. Up to the date of this financial statements, COVID-19 has not resulted in material impact to the Group. Pending the development and spread of COVID-19 subsequent to the date of this financial statements, further changes in economic conditions may have impact on the financial results of the Group, the extent of which could not be estimated as at the date of this financial statements. The Group will continue to monitor the development of COVID-19 and react actively to its impact on the financial position and operating results of the Group.


The Audit Committee shall meet at least twice a year. During the year, three meetings of the Audit Committee were held and attended by the external auditors of the Company. The attendance of the members was set out in the sub-section headed “Board Meetings” of this report.

The primary duties of the Audit Committee include acting as the key representative body for overseeing the relationship with the external auditors; reviewing and monitoring the effectiveness of the audit process; reviewing the Group’s financial information; overseeing the Group’s financial reporting system and risk management and internal control systems. The latest terms of reference of the Audit Committee can be viewed on the websites of the Stock Exchange and the Company at www.hkexnews.hk and www.avicjoyhk.com, respectively.

During the year, the Audit Committee has held three meetings and has reviewed and discussed the financial reporting matters, including:

(i) reviewed and recommended for the Board’s approval the interim and annual results, the interim report and annual report and other financial statements;

(ii) considered and discussed the reports and presentations from the external auditors and the senior management, respectively, with particular focus on the appropriateness of accounting policies and practices, areas of judgment, compliance with the Hong Kong Financial Reporting Standards and other legal requirements in relation to financial reporting;

(iii) recommended to the Board on the re-appointment of the external auditors and the relevant terms of engagement, including their remuneration;

(iv) reviewed the risk management and internal control systems of the Group and the effectiveness of the Group’s internal audit function for the year which covered financial, operational and compliance controls. The process used in such review including discussions with the management of the Company on the risk areas identified and the review of findings and reports from an independent professional advisor. The Audit Committee reviewed and concurred with the management’s confirmation that the Group’s risk management and internal control systems were effective and adequate for the year; and

(v) reviewed and was satisfied with the adequacy of the resources, staff qualification and experience, training programmes and budget of the Company’s accounting, financial reporting and internal audit functions.

From 1 January 2017 to 1 April 2017, the Remuneration Committee comprised four members, namely Mr. Hu Xiaowen (Chairman of the Remuneration Committee), Mr. Wu Meng, Mr. Gong Changhui and Mr. Zhu Dong. Subsequent to Mr. Wu’s resignation and his cessation to be a member of the Remuneration Committee with effect from 1 April 2017, the Remuneration Committee comprises three members, namely, Mr. Hu Xiaowen, Mr. Gong Changhui and Mr. Zhu’s. Subsequent to Mr. Huang Bo’s appointment as a member of the Remuneration Committee with effect from 30 June 2017, the Remuneration Committee comprises four members, namely, Mr. Hu Xiaowen, Mr. Gong Changhui, Mr. Zhu Dong and Mr. Huang Bo. Subsequent to Mr. Zhu’s resignation and his cessation to be a member of the Remuneration Committee with effect from 5 November 2017, Mr. Huang’s resignation and his cessation to be a member of the Remuneration Committee with effect from 23 November 2017, Mr. Hu’s resignation and his cessation to be the chairman and a member of the Remuneration Committee with effect from 2 December 2017, and Mr. Gong’s resignation and his cessation to be a member of the Remuneration Committee with effect from 4 December 2017 and the appointment of Mr. Jiang Ping as the chairman and a member of the Remuneration Committee, the appointment of Mr. Guo Wei and Ms. Wu Rui as members of the Remuneration Committee, all with effect from 4 December 2017, the Remuneration Committee comprises three members, namely, Mr. Jiang Ping (Chairman of the Remuneration Committee), Mr. Guo Wei and Ms. Wu Rui.

The Remuneration Committee shall meet at least once a year. During the year, three meetings of the Remuneration Committee were held and the attendance of the members was set out in the sub-section headed “Board Meetings” of this report.

Details of the Directors’ emoluments and remuneration payable to members of senior management by band are set out in note 9 to the financial statements. The Remuneration Committee adopted the model “to determine, with delegated responsibility, the remuneration packages of individual executive Directors and senior management”.

The primary duties of the Remuneration Committee include to make recommendations to the Board on the Company’s policy and structure for all Directors’ and senior management’s remuneration, to review and approve the management’s remuneration proposal with reference to the Company’s corporate goals and objectives, to determine the remuneration packages of individual executive Directors and senior management including benefits in kind, pension rights and compensation payment comprising any compensation payable for loss or termination of their office or appointment, to make recommendations to the Board on the remuneration of non-executive Directors. The latest terms of reference of the Remuneration Committee can be viewed on the websites of the Stock Exchange and the Company at www.hkexnews.hk and www.avicjoyhk.com, respectively.


# 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

# Classification of financial assets (Continued)

An investment in debt securities is classified as follows depending on the instruments’ contractual cash flow characteristics and the Group’s business model for managing the investment:

• Amortised cost when (a) the contractual terms of the asset give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding and (b) the financial asset is held within a business model whose objective is achieved by collecting contractual cash flows.

• FVTOCI when (a) the contractual terms of the asset give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding and (b) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial asset.

• FVTPL when either (a) the contractual terms of the asset give rise on specified dates to cash flows that are not solely payment of principal and interest on the principal amount outstanding or (b) the financial asset is held within a business whose objective is neither (i) collecting contractual cash flows nor (ii) collecting contractual cash flows and selling the financial asset.

For investments in debt securities subsequently measured at FVTOCI, fair value changes are recognised in other comprehensive income and accumulated in the “FVTOCI (debt investment) reserve” except for impairment loss (see below) and foreign exchange gains or losses. Interest income is calculated using the effective interest method and is recognised in profit or loss. When an investment in debt securities is derecognised, the fair value changes previously recognised in other comprehensive income are reclassified from equity to profit or loss as a reclassification adjustment.

An investment is debt securities is derecognised when the Group sells the investment or when the contractual rights to the cash flows from the asset expire.

Transaction costs directly attributable for the acquisition of financial assets (other than those classified or designated as at FVTPL) are included in the initial measurement of the financial assets. For financial assets subsequently measured at amortised cost, such transaction costs are included in the calculation of amortised cost using the effective interest method (i.e. in effect amortised through profit or loss over the lives of the financial assets). For investments in equity securities at FVTOCI, such transaction costs are recognised in other comprehensive income as part of change in fair value at the next remeasurement. For investments in debt securities classified as FVTOCI, such transaction costs are amortised to profit or loss using the effective interest method (i.e. in effect amortised through profit or loss over the lives of the financial assets).

The Group has applied the expected credit loss model under HKFRS 9 to the following types of financial assets:

• financial assets that are subsequently measured at amortised cost (including cash and cash equivalents and trade receivables); and

• contract assets as defined in HKFRS 15.

Expected credit loss (ECL) of a financial asset is measured based on an unbiased and probability-weighted amount. It also reflects the time value of money and reasonable and supportable information that is available to the Group without undue cost or effect at the reporting date about past events, current conditions and forecasts of future economic conditions. The maximum period considered when estimating ECL is the maximum contractual period over which the Group is exposed to credit risk.

ECL is measured on either of the following bases:

• 12-month expected credit loss when, at the reporting date, the credit risk on a financial asset has not increased significantly since initial recognition; and

• Lifetime expected credit loss when (a) at the reporting date, the credit risk on a financial asset has increased significantly since initial recognition; or (b) at the reporting date, the financial asset has become credit-impaired.


Mr. Tung Tsun Hong (董信康先生) (“Mr. TH Tung”), aged 80, the founder of the Group, the chairman of the Board, an executive director (the “Director”) and one of the controlling shareholders. Mr. TH Tung joined the Group on 16 January 1981. Mr. TH Tung has approximately 62 years of experience in the textile and apparel industry. He is primarily responsible for overseeing the Group’s overall development strategy. He is the father of Mr. Stephen Tung and Mr. Stanley Tung, both being executive Directors.

Mr. Tung Wai Ting Stephen (董韋霆先生) (formerly known as Mr. Tung Hak Ming Stephen (董克明先生)) (“Mr. Stephen Tung”), aged 51, the chief executive officer, an executive Director and one of the controlling shareholders. Mr. Stephen Tung joined the Group on 6 October 1995. Mr. Stephen Tung obtained a Bachelor of Commerce degree at the University of Toronto in Canada in June 1993, and has approximately 25 years of experience in the textile and apparel industry. He is primarily responsible for administration, finance and production of the Group. Mr. Stephen Tung is the son of Mr. TH Tung, and brother of Mr. Stanley Tung, both being executive Directors.

Mr. Tung Cheuk Ming Stanley (董卓明先生) (“Mr. Stanley Tung”), aged 47, the sales director, an executive Director and one of the controlling shareholders. Mr. Stanley Tung joined the Group on 1 April 1997. Mr. Stanley Tung obtained a Bachelor of Arts degree from University of Toronto in Canada in November 1996, and has approximately 24 years of experience in the textile and apparel industry. He is primarily responsible for the sales and marketing of the Group. Furthermore, he has been assisting our product development by participating in international fabric exhibitions and fashion shows in various countries including the PRC and the United States. He is the son of Mr. TH Tung, and brother of Mr. Stephen Tung, both being executive Directors.

Mr. Tsang Ling Biu Gilbert (曾令鏢先生), aged 50, an independent non-executive Director. Mr. Tsang joined the Group on 19 June 2018. He is primarily responsible for supervising and providing independent advice to the Board. He is also the chairman of our audit committee. Mr. Tsang has over 23 years of experience in finance and accounting. Mr. Tsang obtained a Master of Commerce in Accounting and Finance from the University of New South Wales in Australia in 1995, and a Graduate Diploma in Applied Finance and Investment from the Securities Institute of Australia in 1996. Mr. Tsang is also a fellow member of the CPA Australia (Certified Practising Accountants).

Mr. Tsang is a non-executive director of Tus International Limited (stock code: 872), a Hong Kong-based investment holding company principally engaged in the trading of cars.

Mr. Cheung Che Kit Richard (張之傑先生), aged 49, an independent non-executive Director. Mr. Cheung joined the Group on 19 June 2018. He is primarily responsible for supervising and providing independent advice to our Board. He is also a member of our audit committee, remuneration committee and nomination committee. Mr. Cheung obtained a Bachelor of Commerce degree with first class honour from Queen’s University in Canada in May 1995. Subsequently he obtained his Master’s degree in Business Administration with high distinction from Harvard Business School in the United States in June 2001. Since 2010, Mr. Cheung has been working as an executive director (Customer and International Business Development) for the Hong Kong Jockey Club. He is responsible for channeling gaming demand in all of racing, football and lottery wagering business, which also includes the exporting of the Hong Kong racing betting product to overseas jurisdictions.

Mr. Leung Wang Ching Clarence, J.P. (梁宏正先生), aged 42, an independent non-executive Director. Mr. Leung joined the Group on 19 June 2018. He is primarily responsible for supervising and providing independent advice to our Board. He is also the chairman of our remuneration committee and nomination committee, and a member of our audit committee. Mr. Leung obtained a Master of Arts degree in Economics from the University of Cambridge in the United Kingdom in March 2003, and has approximately 21 years of experience in the textile and apparel industry.

Mr. Leung has been serving the community and the textile industry by holding various positions in a number of institutions and organisations. From April 2017 to March 2018, Mr. Leung was a member of the Textile Advisory Board. He has been a member of the Committee of Beijing Chinese People’s Political Consultative Conference (with a term of five years), the chairman of the Third Committee of Youth of the Business and Professionals Alliance for Hong Kong since 2013 and 2016, respectively.

Mr. Leung is currently an independent non-executive director of Lai Sun Development Company Limited (stock code: 488), a Hong Kong-based investment holding company principally engaged in property investment, property development and investment in and operation of hotels and restaurants.

Ms. Poon Yuet Ling (潘月玲女士), aged 61, joined the Group on 5 August 1986 and is currently the senior accounting manager. Ms. Poon is primarily responsible for overseeing daily accounting operation, financial management, administration and human resource management of the Group. Ms. Poon completed her secondary education in Hong Kong in July 1977 and obtained an intermediate group certificate in business studies at the Hong Kong School of Commerce in February 1978. She has over 32 years of experience in accounting practice.

Mr. Tung Ming Po (董鳴寶先生), aged 74, is currently our assistant general manager. Mr. MP Tung is primarily responsible for administering and coordinating the manufacturing process of the Group. Prior to joining the Group, Mr. MP Tung worked in the same shipping agency for over 21 years, with his last position being the manager of the licenced crew department. As the manager, he was in charge of the manning of crew and officers such as recruitment, deployment and relief planning. Mr. Tung moved to Australia in December 1989 and returned to Hong Kong in September 1992, and joined the Group in October 1992.

Mr. Li Chi Hiu Lawrence (李之曉先生), aged 46, joined the Group on 1 July 2004 and is currently our sales manager. Mr. Li is primarily responsible for overseeing the sales management of the Group. Mr. Li graduated from the Seneca College of Applied Arts & Technology in Toronto, Canada in April 1997, and has more than 20 years of experience in the textile industry. Prior to joining our Group in 2005, Mr. Li was the project manager in Tiong Liong Industrial Company, a company based in Taiwan which manufactures and supplies functional textiles.

Mr. Cheung Ka Chun (張家俊先生), aged 38, was appointed as the chief financial officer and the company secretary of our Company on 16 January 2018 and is primarily responsible for (i) overseeing the financial and accounting functions of our Group and (ii) handling corporate secretarial and compliance work of our Group. Mr. Cheung has over 12 years of experience in audit and assurance and multi-national certified public accounting firms. Mr. Cheung was awarded the bachelor’s degree of Business Administration (majoring in accounting and finance) by the University of Hong Kong in December 2004. He is a member of the Hong Kong Institute of Certified Public Accountants.


# (III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

# 10.3 Impairment of financial assets (Continued)

# Impairment of financial assets measured at cost

If an impairment loss has been incurred on an investment in unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be reliably measured, the carrying amount of the financial asset is reduced to the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. The amount of reduction is recognized as an impairment loss in profit or loss. The impairment loss on such financial asset is not reversed once it is recognized.

The Group derecognises a financial asset if one of the following conditions is satisfied: (1) the contractual rights to the cash flows from the financial asset expire; or (2) the financial asset has been transferred and substantially all the risks and rewards of ownership of the financial asset is transferred to the transferee; or (3) although the financial asset has been transferred, the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but has not retained control of the financial asset.

For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the difference between the carrying amount of the financial asset transferred and the sum of the consideration received from the transfer and any cumulative gain or loss that has been recognized in other comprehensive income, is recognized in profit or loss.

# 10.5 Classification, recognition and measurement of financial liabilities

On initial recognition, financial liabilities are classified into financial liabilities at fair value through profit or loss and other financial liabilities.

The Group’s financial liabilities are other financial liabilities, including notes payable, account payable, dividends payable and other payables.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with gain or loss arising from derecognition or amortisation recognized in profit or loss.

The Group derecognises a financial liability (or part of it) only when the underlying present obligation (or part of it) is discharged. An agreement between the Group (an existing borrower) and an existing lender to replace the original financial liability with a new financial liability with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.

# 10.6 Derecognition of financial liabilities (Continued)

When the Group derecognises a financial liability or a part of it, it recognises the difference between the carrying amount of the financial liability (or part of the financial liability) derecognized and the consideration paid (including any non-cash assets transferred or new financial liabilities assumed) in profit or loss.

# 10.7O ffsetting financial assets and financial liabilities

Where the Group has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities, and intends either to settle on a net basis, or to realise the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above circumstances, financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The issuance of equity instruments is deemed as changes in equity. The Group does not recognise any changes in the fair value of equity instruments. Transaction fees relevant to equity transactions are deducted from equity.

Distributions made by the Group to holders of equity instruments are treated as profit distributions.

# 11.1 Receivables that are individually significant and for which bad debt provision is individually assessed

Criteria for determining
receivables that are individually
significant	A receivable that exceeds RMB5 million is deemed as an
individually significant receivable by the Group.

Method of determining
provision for receivables that
are individually significant	For receivables that are individually significant, the Group
assesses the receivables individually for impairment. For
a financial asset that is not impaired individually, the
Group includes the asset in a group of financial assets
with similar credit risk characteristics and collectively
assesses them for impairment. Receivables for which
an impairment loss is individually recognized are not
included in a collective assessment of impairment.


	Notes	Year ended 31 December

2020	2019

Investing activities

Proceeds from disposal and redemption of investments		2,570,954	1,940,528

Proceeds from disposal of propertly, pant and
equipment, land use rihgts, and other assets		368	399

Cash received from equity investment income		416	373

Payments on acquisition of investments		(2,783,341)	(2,190,629)

Payments on acquisition of propertly, pant and
equipment, land use rihgts and other assets		(4,619)	(4,056)

Net cash paid for acquisition of associates and joint
ventures	24	(2,027)	—

Net cash received from disposal of associates		—	321

Net cash flows used in investing activities		(218,249)	(253,064)

Financing activities

Cash received from debt securities issued	39	807,022	586,270

Cash received from other equity instruments issued	43	—	39,993

Cash paid for redemption of debt securities issued		(720,194)	(486,792)

Interest paid on debt securities issued		(22,319)	(22,829)

Dividends paid		(15,094)	(13,052)

Princilipe and nterest dlpai for easinliliig abites		(3,443)	(3,011)

Net cash flows from financing activities		45,972	100,579

Net decrease in cash and cash equivalents		(15,414)	(35,516)

Cash and cash equivalents as at 1 January		342,449	376,009

Effect of exchange rate changes on cash and cash
equivalents		(7,469)	1,956

Cash and cash equivalents as at 31 December	50	319,566	342,449

Cash flows from operating activities include:

Interest received		306,814	291,967

Interest paid		(117,290)	(119,236)

The accompanying notes form an integral part of these consolidated financial statements.

China CITIC Bank Corporation Limited (the “Bank” or “CNCB”) is a joint stock company incorporated in the People’s Republic of China (the “PRC” or “Mainland China”) on 31 December 2006. Headquartered in Beijing, the Bank’s registered office is located at 6-30F and 32-42F No.10 Guanghua Road, Chaoyang District, Beijing, China. The Bank listed its A shares and H shares on Shanghai Stock Exchange and the Main Board of The Stock Exchange of Hong Kong Limited, respectively on 27 April 2007.

The Bank operates under financial services certificate No. B0006H111000001 issued by the China Banking Insurance Regulatory Commission (the “CBIRC”, originally named China Banking Regulatory Commission), and unified social credit code No. 91110000101690725E issued by the State Administration of Industry and Commerce of the PRC.

The principal activities of the Bank and its subsidiaries (collectively the “Group”) are the provision of corporate and personal banking services, conducting treasury business, the provision of asset management, finance leasing and other non-banking financial services.

As at 31 December 2020, the Group mainly operates in Mainland China with branches covering 31 provinces, autonomous regions and municipalities. In addition, the Bank’s subsidiaries have operations in Mainland China, the Hong Kong Special Administrative Region of PRC (“Hong Kong”) and other overseas countries and regions.

For the purpose of these consolidated financial statements, Mainland China refers to the PRC excluding Hong Kong, the Macau Special Administrative Region of the PRC (“Macau”) and Taiwan. Overseas refers to countries and regions other than Mainland China.

The consolidated financial statements were approved by the Board of Directors of the Bank on 25 March 2021.

These consolidated financial statements have been prepared on a going concern basis. The consolidated financial statements for the year ended 31 December 2020 comprise the Bank and its subsidiaries, associates and joint ventures.

The accounting year of the Group is from 1 January to 31 December.

# (b) Functional currency and presentation currency

The functional currency of the Bank is Renminbi (“RMB”). The functional currencies of overseas subsidiaries are determined in accordance with the primary economic environment in which they operate, and are translated into Renminbi for the preparation of the consolidated financial statements according to Note 4 (b)(ii). The consolidated financial statements of the Group are presented in Renminbi and, unless otherwise stated, expressed in millions of Renminbi.

These consolidated financial statements have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), and the disclosure requirements of the Hong Kong Companies Ordinance (Cap. 622). These consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

These consolidated financial statements have been prepared under the historical cost convention, as modified by financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and at fair value through other comprehensive income, and investment properties, which are carried at fair value.


Mr. Shan Fu (付山), aged 52, has been a Director since February 5, 2018. Mr. Fu was re-designated as a Non-executive Director on September 27, 2019.

From June 2008 to October 2013, Mr. Fu served as the senior managing director of the Beijing branch of Blackstone (Shanghai) Equity Investment Management Company Limited. Since October 2013, Mr. Fu has served as aj oint chief executive officer and the Greater China chief executive officer of Vivo Capital LLC. Since January 2016, Mr. Fu has served as a non-executive director in TOT BIOPHARM International Company Limited (“TOT”), a company whose shares are listed on the Stock Exchange (stock code: 01875) since November 2019, a company incorporated with limited liability in Hong Kong. Since July 2018, Mr. Fu has served as a non-executive director of Sinovac Biotech Co., Ltd., a company whose shares are listed on the NASDAQ Global Market (stock code: SVA).

Mr. Fu received his Bachelor of Arts degree in history from Peking University in July 1988 and obtained his Master’s degree in history from Peking University in July 1991.

Mr. Lijun Lin (林利軍), aged 46, has been a Director since January 29, 2019. Mr. Lin was re-designated as a Non-executive Director on September 27, 2019.

From August 1997 to July 2001, Mr. Lin worked in the Shanghai Stock Exchange, where his last position held was assistant to the director of the listing department. From May 2004 to May 2015, Mr. Lin served as the chief executive officer of China Universal Asset Management Co., Ltd. From July 2014 to April 2017, Mr. Lin served as a director of Shanghai Chengtou Holding Co., Ltd., a company whose shares are listed on the Shanghai Stock Exchange (stock code: 600649). From November 2015 to March 2019, Mr. Lin served as a director of Yunfeng Financial Group Limited, a company whose shares are listed on the Hong Kong Stock Exchange (stock code: 00376). From March 2016 to June 2019, Mr. Lin served as a director of TANSH Global Food Group, a company whose shares are listed on the Hong Kong Stock Exchange (stock code: 03666). Since September 2015, Mr. Lin has served as a partner at Loyal Valley Capital. Mr. Lin has served as an independent director of Yintech Investment Holdings Limited, a company whose shares are listed on the NASDAQ Global Market (stock code: YIN), since April 2016, an independent director of Shanghai Xinhua Media Co., Ltd., a company whose shares are listed on the Shanghai Stock Exchange (stock code: 600825), since August 2017, a director of Wenzhou Kangning Hospital Co., Ltd., a company whose shares are listed on the Stock Exchange (stock code: 02120), since June 2017 and a non-executive director of Shanghai Junshi since June 2018.

Mr. Lin obtained a fund qualification certificate qualification from the Asset Management Association of China in June 2017. Mr. Lin received his Master’s degree in world economics from Fudan University in June 1997 and his Master’s degree in business administration from Harvard University in June 2003.

Dr. Zemin Zhang, Ph.D., aged 52, has been serving in the capacity of an independent Director since March 6, 2016. Dr. Zhang was re-designated as an INED of the Company effective as of September 27, 2019 and has been serving the Company as a member of our Scientific Advisory Board since November 2015. During the period when Dr. Zhang served as an independent Director from March 2016 to September 2019, Dr. Zhang provided independent and professional advice to the Board and was not involved in the day-to-day management of the Group.

From January 1998 to August 2014, Dr. Zhang served as a principal scientist at Genentech Inc. Since May 2014, Dr. Zhang has served as a tenured professor at the life sciences department of Peking University. Dr. Zhang is the founder of Analytical BioSciences Limited, and has served on the board since January 2019.

Dr. Zhang is serving as a member of the Chinese Society for Cell Biology of Bioinformatics and Systems Biology with a tenure from 2016 to 2019.

Dr. Zhang received his Bachelor of Science degree in genetics from Nankai University in July 1988 and obtained his Doctor’s degree in biochemistry and molecular biology from Pennsylvania State University in August 1995.

Ms. Lan Hu (胡蘭), aged 48, is appointed as an INED of the Company effective as of the date of this prospectus.

Ms. Hu has more than 20 years of experience in accounting. Ms. Hu has served as an INED in TOT BIOPHARMA International Company Limited, a company incorporated with limited liability in Hong Kong. Prior to that, Ms. Hu was the partner of the consulting services department of PricewaterhouseCoopers between July 2008 and June 2018, and she worked at PricewaterhouseCoopers from July 2002. Ms. Hu worked at Arther Andersen from July 1994 to June 2002.

Ms. Hu received her Bachelor’s degree in industrial accounting from Beijing Machinery and Industrial Institute in Beijing in July 1994 and obtained her master of business administration degree from the University of Buffalo, the State University of New York in February 2005. Ms. Hu gained her CICPA qualification in March 1997.

Dr. Kaixian Chen Ph.D. (陳凱先), aged 74, is appointed as an INED of the Company effective as of the date of this prospectus.

Since 1990, Dr. Chen has been a researcher of the Shanghai Institute of Materia Medica, Chinese Academy of Sciences, and has served as its director between 1996 and 2004, and was appointed as director of its degree committee in 2014. He has also been a professor of the Shanghai University of Traditional Chinese Medicine since 2005, served as president of the university from 2005 to 2014.


# X. Related party relationship and transactions (Continued)

# (V). Related parties transactions (Continued)

# 4. Guarantee in related party transactions (Continued)

Note 6: The Company offers maximum guarantee of RMB100,000,000, which is the comprehensive bank credit amount offered by China Electronics Finance Co., Ltd, to Nanjing Panda Electronic Equipment Co., Ltd, a subsidiary of The Company. The bank credit has duration from 12nd July, 2017 to 12nd July, 2018 and the guarantee lasts for 2 years from the deadline of performance of the debtor. Nanjing Panda Electronic Equipment Co., Ltd offers its total assets as counter guarantee. As of 31st December 2017, Nanjing Panda Electronic Equipment Co., Ltd has used RMB13,278,087.04 of its total comprehensive bank credit, of which RMB3,479,104.00 is guaranteed by The Company in the form of letter of guarantee offered by The Company, RMB9,798,983.04 is guaranteed in the form of bank acceptance bill.

Note 7: The Company offers maximum guarantee of RMB40,000,000.00, which is the comprehensive bank credit amount offered by Shanghai Pudong Development Bank, Nanjing Branch, to Nanjing Panda Electronic Equipment Co., Ltd, subsidiary of The Company. The bank credit has duration from 24th July 2017 to 16th June 2018, and the guarantee lasts for 2 years from the deadline of performance of the debtor. Nanjing Panda Electronic Equipment Co., Ltd offers its total assets as counter guarantee. As of 31st December 2017, Nanjing Panda Electronic Equipment Co., Ltd has used RMB0.00 of its total comprehensive bank credit.

Note 8: The Company offers irrevocable maximum guarantee of RMB60,000,000.00, which is the comprehensive bank credit amount offered by China Merchant Bank, Nanjing Branch, Chengdong Branch, to Nanjing Panda Electronic Manufacture Co., Ltd., a subsidiary of The Company. The credit has a period from 1st November 2017 to 31st October 2018. The guarantee has a period from the date the guarantee is signed to the due date of each loan or to other financing agreements or the due date of received account receivables by China Merchant Bank, Nanjing Branch, or advance in cash, plus 2 years. If any of the above has extended their credit period, the guarantee period is extended accordingly, plus 2 years. Nanjing Panda Electronic Manufacture Co., Ltd. offers its total assets as counter guarantee. As of 31st December 2017, Nanjing Panda Electronic Manufacture Co., Ltd. has used RMB36,712,619.40 of its total comprehensive bank credit, of which RMB36,712,619.40 is guaranteed by The Company in the form of bank acceptance bill offered by The Company.

Note 9: The Company offers maximum guarantee of RMB60,000,000.00, which is the comprehensive bank credit amount offered by Industrial Bank, Nanjing Branch, Maigao Bridge Branch, to Nanjing Panda Electronic Manufacture Co., Ltd., subsidiary of The Company. The guarantee has a period from 19th January 2017 to 29th November 2017. The guarantee lasts for 2 years from the deadline of performance of the debtor. Nanjing Panda Electronic Manufacture Co., Ltd. offers its total assets as counter guarantee. As of 31st December 2017, Nanjing Panda Electronic Manufacture Co., Ltd has used RMB19,953,459.49 of its total comprehensive bank credit, of which RMB19,953,459.49 is guaranteed by The Company in the form of bank acceptance bill offered by The Company.

Note 10: The Company offers maximum guarantee of RMB40,000,000.00, which is the comprehensive bank credit amount offered by Shanghai Pudong Development Bank, Nanjing Branch, to Nanjing Panda Electronic Manufacture Co., Ltd, subsidiary of The Company. The bank credit has duration from 24th July 2017 to 16th June 2018, and the guarantee lasts for 2 years from the deadline of performance of the debtor. Nanjing Panda Electronic Equipment Co., Ltd offers its total assets as counter guarantee. As of 31st December 2017, Nanjing Panda Electronic Equipment Co., Ltd has used RMB0.00 of its total comprehensive bank credit.

Note 11: The Company offers irrevocable maximum guarantee of RMB50,000,000.00, which is the comprehensive bank credit amount offered by Shanghai Pudong Development Bank, Nanjing Branch，to Nanjing Huage Electronic Plastic Industry Co., Ltd., sub-subsidiary of The Company. The guarantee has a period from 24th July, 2017 to 16th June, 2018. The guarantee lasts for 2 years from the deadline of performance of the debtor. If any of the above has extended their credit period, the guarantee period is extended accordingly, plus 2 years. Nanjing Huage Electronic Plastic Industry Co., Ltd. offers its total assets as counter guarantee. As of 31st December 2017, Nanjing Huage Electronic Plastic Industry Co., Ltd. has used RMB5,943,215.36 of its total comprehensive bank credit, of which RMB5,943,215.36 is guaranteed in the form of bank acceptance bill offered by The Company.

Note 12: The Company offers irrevocable maximum guarantee of RMB50,000,000.00, which is the comprehensive bank credit amount offered by China Electronics Finance Co., Ltd to Nanjing Huage Electronic Plastic Industry Co., Ltd., sub-subsidiary of The Company. The guarantee has a period from 5th September, 2017 to 12th July, 2018. The guarantee lasts for 2 years from the deadline of performance of the debtor. If any of the above has extended their credit period, the guarantee period is extended accordingly, plus 2 years. Nanjing Huage Electronic Plastic Industry Co., Ltd. offers its total assets as counter guarantee. As of 31st December 2017, Nanjing Huage Electronic Plastic Industry Co., Ltd. has used RMB9,209,587.33 of its total comprehensive bank credit, of which RMB9,209,587.33 is guaranteed in the form of bank acceptance bill offered by The Company.

Note 13: The Company offers maximum guarantee of RMB15,000,000.00, which is the comprehensive bank credit amount offered by Industrial Bank, Nanjing Branch, Maigao Bridge Branch, to Nanjing Panda Machine Electricity Manufacturing Co., Ltd, a sub-subsidiary of The Company. The guarantee has a period from 22nd May 2017 to 29th November 2017. The guarantee lasts for 2 years from the deadline of performance of the debtor. Nanjing Panda Machine Electricity Manufacturing Co., Ltd offers its total assets as counter guarantee. As of 31st December 2017, Nanjing Panda Machine Electricity Manufacturing Co., Ltd has used RMB1,260,000.00 of its total comprehensive bank credit, of which RMB1,260,000.00 is guaranteed by The Company in the form of bank acceptance bill offered by The Company.

Conclusively, as of 31st December 2017, total guarantee offered by The Company amounting to RMB298,218,859.04, of which RMB109,253,510.60 is for acceptance bill guarantee, RMB95,318,449.33 is for letter of guarantee, and RMB45,000,000.00 is for credit loan guarantee, RMB48,646,899.11 for letter of credit. (As of 31st December 2016, total guarantee offered by The Company amounting RMB254,658,354.69 of which RMB76,477,158.47 is for acceptance bill guarantee, and RMB138,181,196.22 is for letter of guarantee and RMB40,000,000.00 for short-term borrowings).


# 19. Property, plant and equipment (continued)

Company	Leasehold
buildings	Machinery
and
equipment	Motor
vehicles	Office
and other
equipment	Total

	$’000	$’000	$’000	$’000	$’000

2015

Cost

Beiiilgnnnfg o financa year	22,912	4,205	268	3,150	30,535

Additions	39	–	30	109	178

Disposals and write-offs	(1,580)	(51)	(269)	(2,160)	(4,060)

Reclassified to investment properties	(12,737)	–	–	–	(12,737)

End of financial year	8,634	4,154	29	1,099	13,916

Accumulated depreciation and impairment
losses

Beiiilgnnnfg o financa year	3,559	4,197	268	2,642	10,666

Depreciation charge	796	2	1	184	983

Disposals and write-offs	–	(51)	(269)	(2,140)	(2,460)

Reclassified to investment properties	(2,596)	–	–	–	(2,596)

End of financial year	1,759	4,148	–	686	6,593

Net book value

End of financial year	6,875	6	29	413	7,323

Company	Leasehold
buildings	Machinery
and
equipment	Motor
vehicles	Office
and other
equipment	Assets
under
construction	Total

	$’000	$’000	$’000	$’000	$’000	$’000

2014

Cost

Beiiilgnnnfg o financa year	17,712	4,205	706	6,266	264	29,153

Additions	5,200	–	–	37	–	5,237

Disposals and write-offs	–	–	(438)	(3,153)	(264)	(3,855)

End of financial year	22,912	4,205	268	3,150	–	30,535

Accumulated depreciation and
impairment losses

Beiiilgnnnfg o financa year	2,926	3,679	457	5,527	–	12,589

Depreciation charge	633	518	40	268	–	1,459

Disposals and write-offs	–	–	(229)	(3,153)	–	(3,382)

End of financial year	3,559	4,197	268	2,642	–	10,666

Net book value

End of financial year	19,353	8	–	508	–	19,869

(a) In 2014, bank borrowings are secured by a debenture over the Group’s assets and a mortgage against a leasehold building in Singapore with a carrying amount of \$19,353,000 (Note 26).

(b) The amount of borrowing cost capitalised as part of the costs in relation to the construction of the new factory was\$899,000 (2014: \$1,337,000) with a capitalisation rate of 5.4% (2014: 5.15%).

	Group	Company

$’000	$’000

2015

Beiiilgnnnfg o financa year	–	–

Transferred from proiperty, lpant and equpment	37,019	10,141

Transferred from land use rihgts	3,729	–

End of financial year	40,748	10,141

Investment properties are leased to non-related parties under operating leases (Note 32).

The following amounts are recognised in profit and loss:

	Group	Company

2015	2015

$’000	$’000

Rental income (Note 6)	3,721	3,064

Direct operating expenses arising from:

– Investment properties that generate rental income	634	634

At the statement of financial position date, the details of the Group’s investment properties are as follows:

Location	Description/existing use	Tenure

28 Quality Road,
Singapore	A storey of office space of
a 3-storey office building	3-years lease from 1 April 2015

9 Fuyuan Street, Erlu, Baoan District,
Shenzhen City, China	A sinlge storefy actoriy buildng	5-years lease with an option for
a further 5-years from
1 October 2015