and game credits (and in some instances, merchandise), between “Food and beverage sales” and “Entertainment and merchandise sales” based upon the price charged for each component when it is sold separately, or in limited circumstances our best estimate of selling price if a component is not sold on a stand-alone basis, which we believe approximates each component’s fair value.

Our entertainment revenue includes customer purchases of game play credits on Play Pass game cards which allow our customers to play the games in our venues. We recognize a liability for the estimated amount of unused game play credits, which we believe our customers will redeem or utilize in the future based on credits remaining on Play Pass cards and utilization patterns. Our total estimate of unearned revenue for unused Play Pass credits as of December 31, 2017 and January 1, 2017 was \$11.9 million and \$5.2 million, respectively, and is included in “Unearned revenues” in our Consolidated Balance Sheets.

We sell gift cards to our customers in our venues and through certain third-party distributors, which do not expire and do not incur a service fee on unused balances. Gift card sales are recorded as deferred revenue when sold and are recognized as revenue when: (a) the gift card is redeemed by the guest or (b) the likelihood of the gift card being redeemed by the guest is remote (“gift card breakage”) and we determine that we do not have a legal obligation to remit the value of the unredeemed gift card under applicable state unclaimed property escheat statutes. Gift card breakage is determined based upon historical redemption patterns of our gift cards.

Revenue Recognition – Franchise Fees and Royalties: Revenues from franchise activities include area development and initial franchise fees received from franchisees to establish new venues, and once a venue is opened, a franchisee is charged monthly royalties based on a percentage of franchised venues’ sales. These fees are collectively referred to as “Franchise fees and royalties” in our Consolidated Statements of Earnings. Area development and initial franchise fees are recorded as unearned franchise revenue when received and recognized as revenue when we have fulfilled all significant obligations to the franchisee, which is generally when the franchised venues associated with the fees open. Continuing royalties and other miscellaneous sales and fees are recognized in the period earned. Continuing royalties and other miscellaneous sales and fees of \$17.9 million, \$17.4 million and \$16.9 million for Fiscal 2017, Fiscal 2016 and Fiscal 2015, respectively, are included in “Franchise fees and royalties” in our Consolidated Statements of Earnings.

Cost of Food, Beverage, Entertainment and Merchandise: Cost of food and beverage includes all direct costs of food and beverage sold to our guests and related paper and birthday supplies used in our food service operations, less “vendor rebates” described below. Cost of entertainment and merchandise includes the direct cost of prizes provided and merchandise sold to our customers, as well as the cost of tickets dispensed to customers and redeemed for prize items. These amounts exclude any allocation of other operating costs including labor and related costs for venue personnel and depreciation and amortization expense, which are disclosed separately.

Vendor Rebates: We receive rebate payments from certain third-party vendors. Pursuant to the terms of volume purchasing and promotional agreements entered into with the vendors, rebates are primarily provided based on the quantity of the vendors’ products we purchase over the term of the agreement. We record these allowances in the period they are earned as a reduction in the cost of the vendors’ products, and when the related inventory is sold, the allowances are recognized in “Cost of food and beverage” in our Consolidated Statements of Earnings.

Rent Expense: We recognize rent expense on a straight-line basis over the lease term, including the construction period and lease renewal option periods provided for in the lease that can be reasonably assured at the inception of the lease. The lease term commences on the date when we take possession and have the right to control use of the leased premises. The difference between actual rent payments and rent expense in any period is recorded as a deferred rent liability and included in “Other Noncurrent Liabilities” on our Consolidated Balance Sheets. Construction allowances received from the landlord as a lease incentive intended to reimburse us for the cost of leasehold improvements (“Landlord contributions”) are accrued as deferred landlord contributions. Landlord contributions are amortized on a straight-line basis over the lease term as a reduction to rent expense.

Advertising Costs: Production costs for commercials and coupons are expensed in the period in which the commercials are initially aired and the coupons are distributed. All other advertising costs are expensed as incurred.

We and our franchisees are required to contribute a percentage of gross sales to administer all the national advertising programs that benefit both us and our franchisees. Because the contributed funds are required to be segregated and used for specified purposes, we do not reflect franchisee contributions as revenue, but rather record franchisee contributions as an offset to reported advertising expenses. Our advertising contributions for Chuck E. Cheese’s franchise venues are paid to the


EXHIBIT NO.	DESCRIPTION

10.26	Form of Non-Qualified Stock Option Award Agreement (incorporated by reference to Exhibit 10.6 to CF
Industries Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on August 4, 2016, File No.
001-32597)**

10.27	Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.7 to CF Industries
Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on August 3, 2009, File No. 001-32597)**

10.28	Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.19 to CF Industries
Holdings, Inc.'s Annual Report on Form 10-K filed with the SEC on February 27, 2014, File No. 001-32597)**

10.29	Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 to CF Industries
Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on November 6, 2014, File No.
001-32597)**

10.30	Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.3 to CF Industries
Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on May 7, 2015, File No. 001-32597)**

10.31	Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.28 to CF Industries
Holdings, Inc.'s Annual Report on Form 10-K filed with the SEC on February 25, 2016, File No. 001-32597)**

10.32	Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.7 to CF Industries
Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on August 4, 2016, File No. 001-32597)**

10.33	Form of Performance Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.20 to
CF Industries Holdings, Inc.'s Annual Report on Form 10-K filed with the SEC on February 27, 2014, File No.
001-32597)**

10.34	Form of Performance Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.3 to CF
Industries Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on November 6, 2014, File No.
001-32597)**

10.35	Form of Performance Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.4 to CF
Industries Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on May 7, 2015, File No.
001-32597)**

10.36	Form of Performance Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 to CF
Industries Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on August 6, 2015, File No.
001-32597)**

10.37	Form of Performance Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.33 to
CF Industries Holdings, Inc.'s Annual Report on Form 10-K filed with the SEC on February 25, 2016, File No.
001-32597)**

10.38	Form of Performance Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.8 to CF
Industries Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on August 4, 2016, File No.
001-32597)**

10.39
10.40	Form of Non-EmlRpoidSyee Drector estricte tock Award Agreement (incorporated by reference to Exhibit 10.3
to CF Industries Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on August 7, 2014, File
No. 001-32597)**
Form of Equity Award Amendment Letter Agreement, dated as of July 21, 2016 (incorporated by reference to
Exhibit 10.5 to CF Industries Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on August 4,
2016, File No. 001-32597)**

10.41	Letter Agreement between Philipp P. Koch and CF Industries Holdings, Inc. (incorporated by reference to
Exhibit 10.2 to CF Industries Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on December
24, 2015, File No. 001-32597)**

10.42	Commitment Letter, dated August 6, 2015, by and among Morgan Stanley Senior Funding, Inc., Goldman
Sachs Bank USA and CF Industries Holdings, Inc. (incorporated by reference to Exhibit 10.1 to CF Industries
Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on August 12, 2015, File No. 001-32597)


EXHIBIT NO.	DESCRIPTION

10.43	Third Amended and Restated Revolving Credit Agreement, dated as of September 18, 2015, among CF
Industries Holdings, Inc., the borrowers from time to time party thereto, the lenders from time to time party
thereto, Morgan Stanley Senior Funding, Inc., as administrative agent, and Morgan Stanley Bank, N.A.,
Goldman Sachs Bank USA, Bank of Montreal, Royal Bank of Canada, The Bank of Tokyo-Mitsubishi UFJ,
Ltd. and Wells Fargo Bank, National Association, as issuing banks (incorporated by reference to Exhibit 10.2
to CF Industries Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on September 23, 2015, File
No. 001-32597)

10.44	Amendment No. 1, dated as of December 20, 2015, to the Third Amended and Restated Revolving Credit
Agreement among CF Industries Holdings, Inc., CF Industries, Inc., the lenders party thereto, the issuing banks
party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent (incorporated by reference to
Exhibit 10.2 to CF Industries Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on December
21, 2015, File No. 001-32597)

10.45	Amendment No. 2, dated as of July 29, 2016, to the Third Amended and Restated Revolving Credit Agreement
among CF Industries Holdings, Inc., CF Industries, Inc., the lenders party thereto, the issuing banks party
thereto and Morgan Stanley Senior Funding, Inc., as Administrative Agent (incorporated by reference to
Exhibit 10.1 to CF Industries Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on August 4,
2016, File No. 001-32597)

10.46	Amendment No. 3, dated as of October 31, 2016, to the Third Amended and Restated Revolving Credit
Agreement among CF Industries Holdings, Inc., CF Industries, Inc., Morgan Stanley Senior Funding, Inc., as
administrative agent under the Existing Revolving Credit Agreement (as defined therein), the issuing banks
under the Existing Revolving Credit Agreement signatory thereto, and the lenders under the Existing
Revolving Credit Agreement signatory thereto (incorporated by reference to Exhibit 10.1 to CF Industries
Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on November 3, 2016, File No. 001-32597)

10.47	Pledge and Security Agreement, dated as of November 21, 2016, among CF Industries Holdings, Inc., CF
Industries, Inc., the Subsidiary Guarantors (as defined therein) party thereto and Morgan Stanley Senior
Funding, Inc., as administrative agent (incorporated by reference to Exhibit 10.1 to CF Industries Holdings,
Inc.’s Current Report on Form 8-K filed with the SEC on November 22, 2016, File No. 001-32597)

10.48	364-Day Bridge Credit Agreement, dated as of September 18, 2015, among CF Industries Holdings, Inc., the
borrowers from time to time party thereto, the lenders from time to time party thereto, and Morgan Stanley
Senior Funding, Inc., as administrative agent (incorporated by reference to Exhibit 10.1 to CF Industries
Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on September 23, 2015, File No. 001-32597)

10.49	Amendment No. 1, dated as of December 20, 2015, to the 364-Day Bridge Credit Agreement among CF
Industries Holdings, Inc., CF Industries, Inc., the lenders party thereto and Morgan Stanley Senior Funding,
Inc., as administrative agent (incorporated by reference to Exhibit 10.1 to CF Industries Holdings, Inc.'s
Current Report on Form 8-K filed with the SEC on December 21, 2015, File No. 001-32597)

10.50	Amended and Restated Nitrogen Fertilizer Purchase Agreement, dated December 18, 2015, by and between CF
Industries Nitrogen, LLC and CHS Inc. (incorporated by reference to Exhibit 10.1 to CF Industries
Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on December 18, 2015, File No. 001-32597)*

12	Ratio of earnings to fixed charges

21	Subsidiaries of the reigstrant

23	Consent of KPMG LLP, independent reistered public accounting figrm

31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

101	The following financial information from CF Industries Holdings, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (1)
Consolidated Statements of Operations, (2) Consolidated Statements of Comprehensive (Loss) Income, (3)
Consolidated Balance Sheets, (4) Consolidated Statements of Equity, (5) Consolidated Statements of Cash
Flows and (6) the Notes to Consolidated Financial Statements


Furthermore, our turnover growth can vary according to the level of maturity of our POS, which is a factor affecting our results of operations. The amount of turnover that a POS generates depends on its stage of operation. Generally, turnover is lower at the initial stage of operation, but a new POS generally generates an operating profit within the first year of operation. The turnover of a new POS tends to continue to increase thereafter as the POS gains customer loyalty and market recognition. Turnover growth of the POS will continue to depend on various factors such as the level of customer traffic, quality of management and the growth rate of the local economy.

# Same Store Sales

Our profitability is affected in part by our ability to successfully grow sales at the existing POS that we operate. We measure this growth through evaluating Same Store Sales and Same Store Sales Growth (please see “— Explanation of Same Store Sales Growth” for further details on how these measures are calculated). The following table sets out a breakdown, by geographical segment, of our Same Store Sales Growth for FY2010, FY2011 and 1HFY2012:

	FY2010	FY2011	1HFY2012

PRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15.2%	35.2%	45.3%

H(1ong K)ong, Macau and Taiwan .......................................	16.0%	32.4%	78.5%

Overall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15.6%	33.8%	61.9%

Note:

(1) Includes self-operated POSi n Hong Kong, Macau and Taiwan only, as POSi n Singapore and Malaysia are all franchised POS.

Although much of our turnover growth in recent years was attributable to the expansion of our POS network, the strong performance of our existing POS on a Same Store Sales basis has also been an important driver for our turnover growth. Our overall Same Store Sales Growth was 33.8% in FY2011 and despite the global economic downturn in 2008 and 2009, our overall Same Store Sales Growth was 15.6% in FY2010. Our Same Store Sales Growth for 1HFY2012 further increased to 61.9%. Our Same Store Sales Growth over FY2010, FY2011 and 1HFY2012 can be partly attributable to our strong promotional activities, which enhance our brand awareness and image in the locations where we operate, and our continuous development and promotion of new and wider range of merchandise, including higher value products to suit market demand. We believe the strength of our customer loyalty programme is a significant factor contributing to our Same Store Sales Growth. Total sales to our customer loyalty programme members in the PRC in our self-operated POS as a percentage of total retail turnover in the PRC has risen from 27.0% for FY2009 to 33.0% for 1HFY2012. For FY2011 and 1HFY2012, over 80% of the top 500 customers (by transaction value) in the PRC were our customer loyalty programme members. Many other factors also influence Same Store Sales including economic conditions, competition, pricing and customer service.

# Maintaining a strong brand image that caters to changing consumer preferences

We derive substantially all of our turnover from sales ofj ewellery products, which depend on the strength of our brand. The strength of our brand is based in part on our long history combined with our reputation for providing trusted high qualityj ewellery with distinctive product designs to a wide range of consumers. We continually develop and promote a wide range ofj ewellery to suit consumer preferences. For example, we produce both traditional and contemporary designs that cater to the needs of customers at all life stages. Although our predominant focus is on the mass luxury segment which we believe has the greatest growth potential in the Greater China region, we also produce high-end luxury products that enable us to meet the demands of wealthy individuals in the region. Our high-end luxury products have also helped us establish our brand as a high-endj ewellery brand which is consistent with our overall marketing and advertising strategy. We have also developed a younger line of products with lower entry prices targeting the younger generation to expand our


customer base and cultivate a retailer-consumer relationship with a younger generation of consumers. Accordingly, a significant part of our success has been and will continue to depend on our ability to maintain our strong brand image and at the same time continue to design and produce a wide range of qualityj ewellery that meets continually changing consumer preferences.

# Ability to secure steady supplies and manage changes to raw material prices

Our ability to source a steady supply of raw materials is another key factor to our success. The cost of inventories recognised as expenses during the Track Record Period constituted at least 90% of our total cost of goods sold during the respective years. We maintain strong relationships with our existing suppliers due in part to our leadership position in the PRC, scale of operations, solid financial performance, reliable payment history and ability to fulfil our suppliers’ selection or membership criteria. For example, we have been selected as a DTC Sightholder and Select Diamantaire of Rio Tinto. We have been able to renew our raw material supply agreements after they expire. In addition toj ewellery, we sell more than a hundred different watch brands, and have well-established business relationships with reputable watch suppliers, including affiliates of LVMH Group, Richemont Group, Rolex group and Swatch Group. We have been able to source mid- to high-end luxury watches from a number of suppliers on an order-by-order basis since the 1960s.

Changes to raw material prices may also affect our results of operations. Ourj ewellery products are made of precious raw materials such as diamonds, coloured stones, jadeite, pearls, gold and other precious metals that are subject to changes in market prices. However, demand forj ewellery products are consumer driven, and as such, we have generally been able to pass-on raw material price changes to our customers. In addition, for our products made of gold, we use gold loans and bullion forward contracts to hedge against the financial impact of gold price fluctuations. For FY2010 as compared to FY2009, the average gold price increased by 17.0% and our turnover from our sales of gold products increased by 22.5% during the same period. For FY2011 as compared to FY2010, the average gold price increased by 26.8% and our turnover from our sales of gold products increased by 68.3% during FY2011. For 1HFY2012 as compared to 1HFY2011, the average gold price increased by 31.8% and our turnover from our sales of gold products increased by 94.7%.

The selling prices of our jewellery products, and particularly gold products, usually reflect the market price of the raw materials in the products and a relatively stable gross margin percentage for those products. While fluctuations in the price of raw materials could impact the selling prices of our products and our gross profit, we have successfully managed such price fluctuations through various selling strategies in order to maximise our nominal sales and hence our gross profit. In addition, we were able to maintain a relatively stable overall gross margin from approximately 28% to 30% during the Track Record Period due to our ability to adjust our product offerings based on a wide selection of jewellery products, including gem-set jewellery, platinum/karat gold products, gold products and watches.

# Staff compensation costs

Compensation costs represent a significant component of our total costs. As at 30 September 2011, we had more than 25,000 employees and our staff related costs constitute a significant portion of our overall expenses. In FY2009, FY2010, FY2011, 1HFY2011 and 1HFY2012, staff related costs relating to our selling and distribution activities were HK\$762.6 million, HK\$975.3 million, HK\$1,354.2 million, HK\$543.3 million and HK\$978.6 million, respectively, representing 31.3%, 30.5%, 30.8%, 30.9% and 34.2% of our total selling and distribution costs, respectively. The compensation programme for our sales personnel is designed to incentivise our employees to perform well at their respective functions by linking a portion of their compensation to our performance. The exact portion that is linked to our performance would depend on each employee’sj ob function and seniority. On the other hand, staff related costs (including director emoluments) relating to our administrative activities in FY2009, FY2010, FY2011, 1HFY2011 and 1HFY2012, were HK\$313.3 million, HK\$344.5 million, HK\$466.8 million, HK\$208.8 million and HK\$390.9 million, representing 61.6%, 53.6%, 51.2%, 48.3% and 55.1% of our total administrative expenses, respectively.


bogus though commonplace. But in any case even if we believe that our language is just one game among many, how can this be anything more than a matter of belief? Whether the anthropologist is ‘native’ or ‘western’, is not his/her work of culture precisely an attempt to explain ‘it’ to (and I would also say fabricate it for) us? And are not these ‘profound’ differences in reality effects of genres—literary, film, scholarly—our genres? Even if then there are profound differences, the only ones we can understand are the ones we understand (or think we do). And reflexively or self-critically we now know that the anthro-pologist can be more inventive than the native, or the native can be inventive for the benefit of the anthropologist.59

There is also the question of future generations. It is improbable that humans have the capacity to think seriously beyond the present and the future which is present in that present. One or two generations—children and grandchildren—have traditionally provided some kind of horizon for measuring this present future and this is embedded in the most fundamental device for the purposive coordination of society which is the rules of inheritance. Cryogenics and cloning may come to offer a sci-fi dissolution of this limited time-frame and elongate the present future. Beyond that, we can allow future generations in as virtual pre-sent discussants to speak for their interests, however we try to institutionalise that.60 (In a partly pre-institutional sense, that is what Greenpeace and Friends of the Earth and other groups are trying to do.) But what often gets muddled up here is the distinction between the worlded nature of postmetaphysical thinking and the viability of transposing our traditional language of trusteeship and responsibility from this world to the world of the future and of its inhabitants. This is necessarily an abstract problem (the cultural allegiances of Greenpeace etc often obscure this) and I suspect it can only be formulated technocratically, ie through calculations, statistics, measurements, computer simulations, and, in the end, probabilistically. And at this level the problem is that it’s difficult to do these calculations for ourselves and it’s difficult to choose between alternative calculations and so it’s difficult to have open-ended discussions about what we should do faced with an agenda assembled in this way.61

In response to all this, Luhmann’s position is blunt:

[Habermas’s] theory sides with the human to join the latter in battle against enemy forces. But isn’t this human merely an invention of this theory, merely a veiling of this theory’s self-reference? If he or she were meant as an empirical object (with the name of subject), the theory would have to declare who, then, is meant, for obviously it cannot send five billion humans, who at the same time are living and acting, on a discursive search for good grounds. Not only the length of this process of searching, and the conditions of ‘bounded rationality’, but already the sheer simultaneity of

---

59 Cf, the Writing Cultures debate literature. 60 J Habermas, The Future of Human Nature (Oxford, Polity, 2003). 61 Cf, the debate around B Lomborg, The Skeptical Environmentalist: Measuring the Real State of the World (Cambridge, Cambridge University Press, 2001).


behaviour would doom such a project. One cannot idealise sociality without taking account of time.62

In other words, the opacity of the problem cannot be redeemed through com-municative rationality, because that solution has no possible foundation in actual communicative situations. It is not just that there is no escape from the distinction between social and psychic systems; it is also the presumption at least that proposals which ignore or bury this problem are doomed to fail. There can, of course, be no proof of this. But why prefer hope to skepticism or circumspection in a world with many possibilities, many of which are ‘sub-optimal’?

# CONCLUSION

One could perhaps describe the race equality agenda as a therapeutic or palliative one at the (national) societal level (and equally this can be regarded as a sub-dimension of a larger pan-European project). The aim is at once to cure or ‘ease’ pathologies and to build a ‘strong’ and healthy societal organism. The assumption is that diversity is to be cherished and that diversity is itself produc-tive. A diverse society is better than a non-diverse, culturally homogenous one. Parekh has some intelligent arguments to support this position (in reality, a more sophisticated position).63 However, who believes this?

I believe it. But I have personal reasons for believing it. That is, in any self-description which I would put into communication, I would offer a selective biography which would explain, if that was demanded, why I ‘personally’ pre-fer to work in a university with students from all over the world (multiethnic, multinational) compared with one where most of the students are from Hertfordshire or Surrey, and most of my colleagues would agree—that is—they would nod assent in an interaction system, although what they really think I do not know. I don’t know if they know. One doesn’t critically test through ‘intro-spection’ whether one believes all the things one assents to in communication. In addition, work is work. Where I live is another matter. What I want or need from where I live is for the most part a quiet environment because I work from home a lot. Certain cultural practices in my immediate environment (neighbours) might not be consistent with that. I may need to make neighbour-related predictions in deciding where to live (along with affordability, space requirements etc). Prejudice is pervasive. Without it ‘personal’ decisions cannot be made.64

---

62 N Luhmann, Theories of Distinction: Redescribing the Descriptions of Modernity (Stanford, Stanford University Press, 2002) 193. 63 B Parekh, Rethinking Multiculturalism: Cultural Diversity and Political Theory (Basingstoke, Palgrave, 2000). 64 TC Schelling, Micromotives and Macrobehaviour (New York, WW Norton, 1978) chapter 4.


The following benefit payments for BNY Mellon’s pension and healthcare plans, which reflect expected future service as appropriate, are expected to be paid over the next 10 years:

Expected benefit payments
(in millions)	Domestic	 Foreign

Pension benefits:

Year 2018	$      280	 $       20

2019	262	19

2020	260	19

2021	262	22

2022	259	23

2023-2027	1,303	137

Total pension benefits	$    2,626	 $      240

Healthcare benefits:

Year 2018	$       13	 $  —

2019	13	—

2020	13	—

2021	13	—

2022	12	—

2023-2027	55	1

Total healthcare benefits	$      119	 $         1

# Plan contributions

BNY Mellon expects to make cash contributions to fund its defined benefit pension plans in 2018 of \$32 million for the domestic plans and \$22 million for the foreign plans.

BNY Mellon expects to make cash contributions to fund its post-retirement healthcare plans in 2018 of \$13 million for the domestic plans and less than \$1 million for the foreign plans.

# Investment strategy and asset allocation

BNY Mellon is responsible for the administration of various employee pension and healthcare post-retirement benefits plans, both domestically and internationally. The domestic plans are administered by BNY Mellon’s Benefits Administration Committee, a named fiduciary. Subject to the following, at all relevant times, BNY Mellon’s Benefits Investment Committee, another named fiduciary to the domestic plans, is responsible for the investment of plan assets. The Benefits Investment Committee’s responsibilities include the investment of all domestic defined benefit plan assets, as well as the determination of investment options offered to participants in all domestic defined contribution plans. The Benefits Investment Committee conducts periodic reviews of investment performance, asset allocation and investment manager suitability. In addition, the Benefits Investment Committee has oversight of the Regional Governance Committees for the foreign defined benefit plans.

Our investment objective for U.S. and foreign plans is to maximize total return while maintaining a broadly diversified portfolio for the primary purpose of satisfying obligations for future benefit payments.

Equities are the main holding of the plans.

Alternative investments (including private equities) and fixed-income securities provide diversification and, in certain cases, lower the volatility of returns. In general, equity securities and alternative investments within any domestic plan’s portfolio can be maintained in the range of 30% to 70% of total plan assets, fixed-income securities can range from 20% to 50% of plan assets and cash equivalents can be held in amounts ranging from 0% to 5% of plan assets. Actual asset allocation within the approved ranges varies from time to time based on economic conditions (both current and forecast) and the advice of professional advisors.

Our pension assets were invested as follows at Dec. 31, 2017 and Dec. 31, 2016:

Asset allocations	Domestic	 Foreign

	2017	2016	2017	2016

Equities	63%	58%	51%	52%

Fixed income	33	36	33	29

Private equities	1	1	—	—

Alternative investment	2	3	9	3

Real estate	—	—	4	4

Cash	1	2	3	12

Total pension benefits	100%	100%	100%	100%

We held no The Bank of New York Mellon Corporation stock in our pension plans at Dec. 31, 2017 and Dec. 31, 2016. Assets of the U.S. post-retirement healthcare plan are invested in an insurance contract.

# Fair value measurement of plan assets

In accordance with ASC 715, Compensation - Retirement Benefits, BNY Mellon has established a three-level hierarchy for fair value measurements of its pension plan assets based upon the transparency of inputs to the valuation of an asset as of the measurement date. The valuation hierarchy is consistent with guidance in ASC 820, Fair Value


Measurement, which is detailed in Note 18 of the Notes to Consolidated Financial Statements.

The following is a description of the valuation methodologies used for assets measured at fair value, as well as the general classification of such assets pursuant to the valuation hierarchy.

# Cash and currency

This category consists primarily of foreign currency balances and is included in Level 1 of the valuation hierarchy. Foreign currency is translated monthly based on current exchange rates.

# Common and preferred stock, exchange-traded funds and mutual funds

These investments include equities, exchange-traded funds and mutual funds and are valued at the closing price reported in the active market in which the individual securities are traded, if available. Where there are no readily available market quotations, we determine fair value primarily based on pricing sources with reasonable levels of price transparency.

# Collective trust funds

Collective trust funds include commingled and U.S. equity funds that have no readily available market quotations. The fair value of the funds is based on the securities in the portfolio, which typically are the amount that the fund might reasonably expect to receive for the securities upon a sale. These funds are valued using observable inputs on either a daily or monthly basis. Collective trust funds are included as Level 2 of the valuation hierarchy.

# Fixed-income investments

Fixed-income investments include U.S. Treasury securities, U.S. government agencies, sovereign government obligations, U.S. corporate bonds and foreign corporate debt funds. U.S. Treasury securities are valued at the closing price reported in the active market in which the individual security is traded and included as Level 1 of the valuation hierarchy. U.S. government agencies, sovereign government obligations, U.S. corporate bonds and foreign corporate debt funds are valued based on quoted prices for comparable securities with similar yields and credit ratings. When quoted prices are not available for identical or similar bonds, the bonds are valued using discounted cash flows that maximize observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks. U.S. government agencies, sovereign government obligations, U.S. corporate bonds and foreign corporate debt funds are primarily included as Level 2 of the valuation hierarchy.

# Other assets measured at NAV

Other assets measured at NAV include funds of funds and venture capital and partnership interests, property funds and other funds. There are no readily available market quotations for these funds. The fair value of the funds of funds is based on NAVs of the funds in the portfolio, which reflects the value of the underlying securities. The fair value of the underlying securities is typically the amount that the fund might reasonably expect to receive upon selling those hard to value or illiquid securities within the portfolios. These funds are either valued on a daily or monthly basis. The fair value of the venture capital and partnership interests is based on the pension plan’s ownership percentage of the fair value of the underlying funds as provided by the fund managers. These funds are typically valued on a quarterly basis. The pension plan’s venture capital and partnership interests are valued at NAV as a practical expedient for fair value.


Share-Based Compensation. Our share-based compensation plan provides the ability to grant equity awards to our employees, consultants and non-employee directors. As of December 31, 2018, only nonqualified stock options, restricted shares, performance stock and restricted share units had been granted under such plans. The fair value of restricted share grants and restricted share units is based on the closing price of our common stock on the grant date. We values option grants based on the grant date fair value using the Black-Scholes option-pricing model, and we value performance awards with market conditions based on the grant date fair value using a Monte Carlo simulation, both of which require the use of subjective assumptions. We recognize share-based compensation expense on a straight-line basis over the requisite service period for the entire award and makes estimates of employee terminations and forfeiture rates which impacts the amount of compensation expense that is recorded over the requisite service period.

Income Taxes. We are subject to income and other similar taxes in all areas in which we operate. When recording income tax expense, certain estimates are required because: (a) income tax returns are generally filed months after the close of our annual accounting period; (b) tax returns are subject to audit by taxing authorities and audits can often take years to complete and settle; and (c) future events often impact the timing of when we recognize income tax expenses and benefits.

We account for income taxes utilizing the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities due to a change in tax rates is recognized as income or expense in the period that includes the enactment date.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. In assessing the likelihood and extent that deferred tax assets will be realized, consideration is given to projected future taxable income and tax planning strategies. A valuation allowance is recorded when, in the opinion of management, it is more likely than not that a portion or all of the deferred tax assets will not be realized.

We have federal, state and international net operating losses ("NOLs") carried forward from tax years ending before January 1, 2018 that will expire in the years 2020 through 2038. Due to U.S. tax reform, any U.S. federal income tax losses incurred for tax years beginning after December 31, 2017 can be carried forward indefinitely with no carry back available. In addition, the taxable losses generated in tax years beginning after December 31, 2017 can only offset 80% of taxable income generated in tax years beginning after December 31, 2018. After considering the scheduled reversal of deferred tax liabilities, projected future taxable income, the potential limitation on use of NOLs under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code") and tax planning strategies, we established a valuation allowance due to the uncertainty regarding the ultimate realization of the deferred tax assets associated with its NOL carryforwards.

As a result of the Chapter 11 Proceeding, on the Plan Effective Date, we believe we experienced an ownership change for purposes of Section 382 of the Code because of its Restructuring Plan. Consequently, our pre-change NOLs are subject to an annual limitation (See Note 14 - Chapter 11 Proceeding and Emergence for additional information, including definitions of capitalized defined terms, about the Chapter 11 Proceeding and emergence from the Chapter 11 Proceeding). The ownership change and resulting annual limitation on use of NOLs are not expected to result in the expiration of our NOL carryforwards if we are able to generate sufficient future taxable income within the carryforward periods. However, the limitation on the amount of NOLs available to offset taxable income in a specific year may result in the payment of income taxes before all NOLs have been utilized. Additionally, a subsequent ownership change may result in further limitation on the ability to utilize existing NOLs and other tax attributes, which could cause our pre-change NOL carryforwards to expire unused.

We recognize the financial statement effects of a tax position when it is more-likely-than-not, based on the technical merits, that the position will be sustained upon examination. A tax position that meets the more-likely-than-not recognition threshold is measured as the largest amount of tax benefit that is greater than 50.0% likely of being realized upon ultimate settlement with a taxing authority. Previously recognized uncertain tax positions are reversed in the first period in which it is more-likely-than-not that the tax position would be sustained upon examination. Income tax related interest and penalties, if applicable, are recorded as a component of the provision for income tax expense. For the year ended December 31, 2018, we have an unrecognized tax benefit of \$6.0 million related to an increase in the estimate of the reserve for unrecognized tax benefits relating to our uncertain tax positions, which is netted against our net operating loss carryforwards. The unrecognized tax benefit, or UTB, is related to a deduction for certain fees that were paid using shares of our common stock as part of the January 7, 2017 plan of reorganization. The recorded unrecognized tax benefit is equal to our estimate of the portion of the tax benefit that is less than 50% likely to be realized upon ultimate settlement with a taxing


authority.

# Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU No. 2016-02 seeks to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. Unlike current U.S. GAAP, which requires only capital leases to be recognized on the balance sheet, ASU No. 2016-02 will require both operating and finance leases to be recognized on the balance sheet. Additionally, the new guidance will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements.

The amendments in ASU No. 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early application is permitted. We adopted this new accounting standard on January 1, 2019 using the modified retrospective approach. Under this transition method, leases existing at, or entered into after the adoption date are required to be recognized and measured. We have elected to use the effective date as its date of initial application, consequently prior period amounts have not been adjusted and continue to be reflected in accordance with historical accounting. We elected the package of practical expedients which permits us to not reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We have also elected the practical expedient to combine the lease and non-lease components of a contract for all of our contracts, as well as the short-term lease recognition exemption.

The adoption of this standard will result in the initial recognition of approximately \$25.0 million to \$28.0 million of right-of-use assets and operating lease liabilities, with no related impact to consolidated stockholders' equity or net income (loss).

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends U.S. GAAP by introducing a new impairment model for financial instruments that is based on expected credit losses rather than incurred credit losses. The new impairment model applies to most financial assets, including trade accounts receivable. The amendments in ASU 2016-13 are effective for interim and annual reporting periods beginning after December 15, 2019, although it may be adopted one year earlier, and requires a modified retrospective transition approach. We are currently evaluating the impact this standard will have on our results of operations and financial position.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"), which requires an entity to recognize the income tax consequences of an intra-entity asset transfer, other than an intra-entity asset transfer of inventory, when the transfer occurs. The ASU is effective for the interim and annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years, and early application is permitted. We adopted this new accounting standard on January 1, 2018, and upon adoption recognized a cumulative effect adjustment as a reduction to retained earnings of \$13.2 million.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"), which establishes a one-step process for testing goodwill for impairment. This ASU is effective for the interim and annual reporting periods beginning after December 15, 2019 and early adoption is permitted. We early adopted this new accounting standard on January 1, 2018 and there no impact on our consolidated financial statements upon adoption. As part of our annual impairment assessment of goodwill during the fourth quarter of 2018, we applied this new accounting standard and recognized an impairment charge of \$146.0 million for the year ended December 31, 2018.

In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Ef ects from Accumulated Other Comprehensive Income ("ASU 2018-02"), which allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act and requires certain disclosures about stranded tax effects. This ASU is effective for the interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial statements.

In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staf Accounting Bulletin No. 118, ("ASU 2018-05"), which provides guidance on accounting for the tax effects of the Tax Cuts and Jobs Act (the Tax Act) pursuant to Staff Accounting Bulletin No. 18, which allows companies to


	Note	2017	2016

RMB’000	RMB’000

Turnover	4	2,005,308	1,400,827

Cost of sales		(1,114,934)	(974,095)

Gross profit		890,374	426,732

Other income	5	453	143

Change in fair value of investment properties	13	–	5,938

Selling and distribution expenses		(53,111)	(67,764)

Administrative expenses		(48,480)	(74,638)

Other expenses	5	(140)	(7,003)

Operating profit		789,096	283,408

Finance income		8,967	1,128

Finance costs		(17,231)	(53,126)

Net finance costs	6(a)	(8,264)	(51,998)

Profit before taxation		780,832	231,410

Income tax	7	(521,320)	(183,366)

Profit for the year		259,512	48,044

Attributable to:

Equity shareholders of the Company		251,181	65,012

Non-controlling interests		8,331	(16,968)

Profit for the year		259,512	48,044

The notes on page 86 to 171 form part of these financial statements.


		2017	2016

	Note	RMB’000	RMB’000

Earnings per share

Basic and diluted (RMB)	11	0.84	0.25

Profit for the year		259,512	48,044

Other comprehensive income	10

Item that may be reclassified subsequently to
profit or loss

Income from changes in fair value of
    available-for-sale financial assets		1,749	–

Item that will not be reclassified subsequently to
profit or loss

Exchange differences on translation of
   financial statements of the Company		(15,232)	8,575

Other comprehensive income for the year		(13,483)	8,575

Total comprehensive income for the year		246,029	56,619

Attributable to:

Equity shareholders of the Company		237,698	73,587

Non-controlling interest		8,331	(16,968)

Total comprehensive income for the year		246,029	56,619

The notes on page 86 to 171 form part of these financial statements.


where \( \rho _ { 0 } = 0 . 1 7 \)\( \mathrm { f m ^ { - 3 } } \) is the empirical saturation density of symmetric nuclear matter. We have separated explicitly the kinetic contribution, \( K / A = 3 k _ { F } ^ { 2 } / 2 0 m \), from the potential terms. Coefficients of this parametrization are shown in II.

	a	b	α	β

( MeV )	 ( MeV )

AV18	5.6520	−28.701	1.97	0.83

Paris	5.7215	−28.727	1.97	0.87

N3LO2N	98.155	−122.14	1.13	1.03

\( \mathbf { \delta } \) 3 \( _ { \cdot } \)\( \mathbf { ) } _ { \mathbf { \Phi } ) } \) +N2LO3N	17.767	−36.815	1.50	0.90

TABLE II. Fit coefficients for the energy per neutron, \( B / A \), following Eq. (22).

# IV. SUMMARY AND CONCLUSION

Within the BHF approach for pure neutron matter at zero temperature, we have in-vestigated di–neutron structures with emphasis placed on the low–density regime. We have calculated self–consistent sp potentials at Fermi momenta up to 2−3 \( \mathrm { f m ^ { - 1 } } \) using the continu-ous choice, restricting the system to a normal (nonsuperfluid) state. We have used AV18 and Paris internucleon potential, in addition to chiral \( \mathrm { N 3 L O } _ { 2 N } \) 2NF as well as \( \mathrm { N 3 L O } _ { 2 N } \mathrm { + N 2 L O } _ { 3 N } \) 3NF. Explicit account for di–neutron bound states is made in the \( { } ^ { 1 } \mathrm { S } _ { 0 } \) channel for the eval-uation of the mass operator during self–consistent searches of the sp potential.

The resulting sp solutions from each of the potentials considered in this work are in fair agreement with those found elsewhere [27, 33, 47–49]. The major conclusion of our work is that di–neutron bound states appear in the BHF approach in the \( { } ^ { 1 } \mathrm { S } _ { 0 } \) channel independently of the Hamiltonian that is used to model neutron interactions. In terms of the Fermi momentum, di–neutrons appear in the regime \( 0 . 0 6 \lesssim k _ { F } \lesssim 1 . 0 5 \)\( \mathrm { f m } ^ { - 1 } \) and are loosely bound, by less than 700 keV. The density dependence of their binding energy is very close for all interactions, which indicates a dominance of many–body correlations in di–neutron formation. In particular, because they appear at low densities, di–neutrons do not seem to be affected by 3NF. More indicative, these bound states form at densities where neutron effective masses become larger than the bare mass. Furthermore, the size of these bound states can get as high as ∼ 100 fm. In contrast to isospin–symmetric nuclear


matter, solutions for the sp spectra do not exhibit coexisting phases [12], mainly due to the fact that \( \mathrm { ^ { 3 } S D _ { 1 } } \) channel is fully suppressed in pure neutron matter. A recent study[50] addressing neutronic and symmetric nuclear matter, considering modern realistic NN interactions, confirms the robustness of theses findings.

The study of nuclear matter, even on its simplest nonrelativistic form, is an exceedingly difficult problem involving various scenarios in density, isospin asymmetry and temperature. On top of that, the emergence of superfluidity, superconductivity and clusterization multiply the physical scenarios under which matter can evolve when confined. The study we have presented is just a first step towards ab initio clusterization studies, going beyond traditional calculations in this context which are based on a variety of phenomenological approximations. In turn, these calculations can provide guidance on clustering in isospin–rich systems.

We can foresee a variety of extension of this work, both at the phenomenological and at the more theoretical level. Within this very same framework, we would like to study the melting of di–neutrons as temperature effects switch on. The extension to isospin asymmetric systems is of relevance for neutron–star matter, but also in the context of nuclear structure and the isospin dependence of clustering correlations. The competition between pairing and bound states in neutron matter is relevant for BEC–BCS studies, and the BHF approach is perfectly suited to provide quantitative guidance on this subject. Finally, it would be interesting to use other many–body techniques to establish firmly the existence of di–neutron bound states in isospin–rich nuclear systems.

# ACKNOWLEDGMENTS

H.F.A. acknowledges partial funding from FONDECYT under grant No 1120396. F.I. thanks funding from CONICYT under contract No. 221320081. This work was supported in part by STFC through Grants ST/I005528/1, ST/J000051/1 and ST/L005816/1. Partial support comes from “NewCompStar”, COST Action MP1304. F.I. thanks the hospitality of colleagues of the University of Surrey, UK, where part of this work took place.

[1] F. Kobayashi and Y. Kanada-En’yo, Phys. Rev. C 88, 034321 (2013).

[2] A. Spyrou, Z. Kohley, T. Baumann, D. Bazin, B. A. Brown, G. Christian, P. A. DeYoung, J. E. Finck, N. Frank, E. Lunderberg, S. Mosby, W. A. Peters, A. Schiller, J. K. Smith, J. Snyder, M. J. Strongman, M. Thoennessen, and A. Volya, Phys. Rev. Lett. 108., 102501 (2012)


# CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2020

	Notes	As at
30 June
2020	As at
31 December
2019

RMB’000	RMB’000

(Unaudited)	(Audited)

NON-CURRENT ASSETS

Property, lipant and equpment	11	7,802,823	8,077,172

Quarry	12	936,682	964,761

Rihfgt-o-use assets		809,310	819,682

Investment properties		121,067	82,420

Goodwill		554,241	554,241

Other intaniblge assets		4,305	3,571

Interests in joint ventures		60,730	56,491

Interests in associates		722,014	725,122

Restricted bank deposits		3,428	–

Deferred tax assets		97,574	82,222

		11,112,174	11,365,682

CURRENT ASSETS

Inventories	13	726,255	674,380

Trade and other receivables	14	2,366,684	3,962,640

Amount due from an associate		10,052	15,959

Amount due from a joint venture		5,005	10,014

Restricted bank deposits		9,854	14,503

Bank balances and cash		9,156,644	7,942,576

		12,274,494	12,620,072

CURRENT LIABILITIES

Trade and other payables	15	1,246,115	2,174,123

Amount due to a joint venture		18,102	5,563

Tax payables		152,365	555,414

Borrowings – due within one year		4,591,785	4,770,215

Lease Liabilities		5,639	4,512

Contract Liabilities	16	184,755	185,525

		6,198,761	7,695,352

NET CURRENT ASSETS		6,075,733	4,924,720

TOTAL ASSETS LESS CURRENT LIABILITIES		17,187,907	16,290,402


	Notes	As at
30 June
2020	As at
31 December
2019

RMB’000	RMB’000

	(Unaudited)	(Audited)

NON-CURRENT LIABILITIES

Borrowings – due after one year		2,295,273	1,444,094

Deferred tax liabilities		58,483	70,555

Lease Liabilities		102,624	96,025

Provision for environmental restoration		41,095	36,734

		2,497,475	1,647,408

NET ASSETS		14,690,432	14,642,994

CAPITAL AND RESERVES

Share cailpta	17	140,390	140,390

Share premium and reserves		14,218,399	14,123,411

Equity attributable to owners of the Company		14,358,789	14,263,801

Non-controlling interests		331,634	379,193

TOTAL EQUITY		14,690,432	14,642,994


Recent models for the evolution of super-Chandrasekhar mass carbon-oxygen white dwarf merger remnants by Schwab et al.8 match the properties of WS35 remarkably well. Not only does their fiducial model fit the Hertzsprung-Russell diagram position of WS35 (Fig. 3). They also predict an extended episode of extreme mass loss during and shortly after the merger event in an expanded cool supergiant stage which will form a slowly-expanding hydrogen- and helium-free circumstellar nebula with an expansion velocity of about 100 \( \mathrm { k m \, s ^ { - 1 } } \). After the settling of the post-merger prod-uct in a hot and compact stage, its ultraviolet emission ionizes the surrounding nebula. Its current∼ 100 times faster wind sweeps the preceding slow material into a shell, which appears inside the density-bounded H II region, which forms the diffuse halo (see Fig. 1). The expected hydrogen-and helium-free composition of the nebula and the high temperature of its central star (leading to triple ionization of oxygen) suggest that no optical nebular lines form and that the observed mid-infrared emission from the nebula is dominated by the [O IV] 25.89 \( \mu \) m and [Ne V] 14.32 and 24.32 \( \mu \) m lines (cf. ref.22). This naturally explains why the nebula WS35 does neither appear in the IPHAS image nor in our long-slit spectrum.

The merging white dwarf scenario also addresses the major puzzle about WS35, namely the extreme width of its emission lines. A velocity of 16, 000 \( | \, \mathrm { k m \, s ^ { - 1 } } \) exceeds the stellar escape speed about 10 times, and is typical for supernovae but so far unheard of for radiation driven winds. Pure radiation driving is in fact excluded, since the wind’s kinetic energy flux exceeds the total radiative luminosity of the star by a factor of two (Methods). The extreme velocity can, however, be explained in the framework of rotating magnetic wind models. Poe et al.23 find that a rigidly co-rotating magnetic field can enhance the speed and mass outflow rate of radiation driven winds by more than a factor of three, at the cost of the star’s rotational energy. We find that a co-rotation speed of 16, 000 \( \mathrm { k m \, s ^ { - 1 } } \) at the Alfve´n point in WS35, where the inertia force starts to dominate over the magnetic forces24, requires an Alfve´n radius of about 10 stellar radii \( \sim 1 . 5 ~ \mathrm { R } _ { \odot } ) \)), which is achieved with a magnetic field strength of \( \sim 1 0 ^ { 8 } \) G. Since the whole post-merger evolution is expected to last ∼ 20, 000 yr (ref.8), it is plausible that the corresponding magnetic torques have not yet spun down WS35.

The generation of a strong magnetic field is indeed expected in stellar mergers25. 3D magneto-hydrodynamical models of white dwarf mergers find a magnetization of the merger product of \( 2 \times 1 0 ^ { 8 } \) G (ref.9). This compares to the peak of the B-field distribution of magnetic white dwarfs of several \( 1 0 ^ { 7 } \) G (ref.26). The observations that the mean mass of magnetic white dwarfs is signif-icantly higher than that of non-magnetic ones, and that nearly none of the known magnetic white dwarfs have a companion star provide strong evidence for magnetic field generation by white dwarf merging26.

Adopting the escape velocity from the expanded merger remnant of ∼ 100 \( \mathrm { k m \, s ^ { - 1 } } \)(cf. ref.7) and given the angular radius of the nebula of 1.6 pc, we derive an expansion age of ∼ 16, 000 yr for WS35. Together with the high temperature of the central star, this indicates that WS35 is close to the endpoint of its post-merger evolution. Since WS35 is more luminous than the \( 1 . 4 9 \, \mathbf { M } _ { \odot } \) model of Schwab et al.8, it appears likely that its mass also exceeds the Chandrasekhar limit, with the exciting perspective that it will produce a low-mass neutron star in the near future, accompanied


by a high-energy transient and a fast evolving supernova11. It is also likely that the inner shell of the circumstellar nebula will persist until the explosion and, given the expected low mass of supernova ejecta, will affect the appearance of the supernova remnant ∼ 100 yr after explosion.

The merging of two stars in a binary system is not a rare event. About 10 per cent of the massive main sequence stars are thought to be merger products27, as well as a similar fraction of the known white dwarfs28. The very unusual wind of WS35 strongly supports the idea that stellar mergers can indeed produce highly magnetized stars, which would explain the magnetic stars of the upper main sequence29 and the formation of the magnetic white dwarfs26. Our results also enlighten the ongoing debate on whether a super-Chandrasekhar mass merger of two carbon-oxygen white dwarfs leads to a Type Ia supernova. Here, WS35 appears to provide a counter example, which will likely produce a neutrino-flash and a gamma-ray burst30, followed by a very fast and subluminous Type Ic supernova11.

# Bibliography

1. Hulse, R. A. & Taylor, J. H. Discovery of a pulsar in a binary system. Astrophys. J. 195, L51–L53 (1975).

2. Abbott, B. P. et al. Observation of gravitational waves from a binary black hole merger. Phys. Rev. Lett. 116, 061102 (2016).

3. Abbott, B. P. et al. Gravitational waves and gamma-rays from a binary neutron star merger: GW170817 and GRB 170817A. Astrophys. J. 848, L13 (2017).

4. Iben, I. & Tutukov, A. V. Supernovae of type I as end products of the evolution of binaries with components of moderate initial mass (M not greater than about 9 solar masses). Astron. Astrophys. Supp. 54, 335–372 (1984).

5. Pakmor, R., et al. Violent mergers of nearly equal-mass white dwarf as progenitors of sublu-minous Type Ia supernovae, Astron. Astrophys. 528, A117 (2011).

6. Saio, H. & Nomoto, K. Off-center carbon ignition in rapidly rotating, accreting carbon-oxygen white dwarfs. Astrophys. J. 615, 444–449 (2004).

7. Shen, K. J., Bildsten, L., Kasen, D. & Quataert, E. The long-term evolution of double white dwarf mergers. Astrophys. J. 748, 35 (2012).

8. Schwab, J., Quataert, E. & Kasen, D. The evolution and fate of super-Chandrasekhar mass white dwarf merger remnants. Mon. Not. R. Astron. Soc. 463, 3461–3475 (2016).

9. Ji, S. et al. The post-merger magnetized evolution of white dwarf binaries: The double-degenerate channel of sub-Chandrasekhar Type Ia supernovae and the formation of magne-tized white dwarfs. Astrophys. J. 773, 136–149 (2013).


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

“2016 Decision”	 the Decision of the Standing Committee of the NPC on
Amending the Private Schools Promotion Law (全國人民代
表大會常務委員會關於修改<中華人民共和國民辦教育促進
法>的決定), which was promulgated on November 7, 2016,
and came into force on September 1, 2017

“2021 Imlpementation Rules”	 the Imlipementaton Rules for the Law for Promoting Private
Education of the PRC (《中華人民共和國民辦教育促進法
實施條例》), which was promulgated by the State Council
on May 14, 2021 and will take effect from September 1,
2021

“affiliate(s)”	 with respect to any specific person, any other person,
directly or indirectly, controlling or controlled by or under
direct or indirect common control with such specified
person

“AliiFppcaton orm(s)”	WHITE alifppcation orm(s), YELLOW aliippcaton form(s)
and GREEN alifppcation orm(s), or where the context so
requires, any one of them, in relation to the Hong Kong
Public Offering

“Articles of Association” or
“Articles”	the amended and restated articles of association of our
Company conditionally adopted on June 23, 2021 and
effective upon the Listing Date and as amended from time to
time, a summary of which is set out in Appendix IV to this
prospectus

“associate(s)”	 has the meaning ascribed to it under the Listing Rules

“Board” or “Board of Directors”	 the board of Directors

“BPPE”	 California Bureau for Private Postsecondary Education, a
unit of the California Department of Consumer Affairs in
charge of regulation of private postsecondary educational
institutions operating in the State of California, the United
States

“Business Cooperation Agreement”	 the business cooperation agreement entered into by and
among Lingnan WFOE, the PRC Affiliated Entities and the
Reistered Shareholders dated November 21, 2020g


“Business Day” or “business day”	 a day on which banks in Hong Kong are generally open for
business to the public and which is not a Saturday, Sunday
or public holiday in Hong Kong

“BVI”	 the British Virilgn Isands

“Caiiptalzation Issue”	 the issue of Shares uipon caiptalzation of certain sums
standing to the credit of the share premium account of our
Company as set out in “A. Further Information about Our
Company — 4. Written Resolutions of the Then
Shareholders Passed on June 23, 2021” in Appendix V to
this prospectus

“CCASS”	 the Central Clearing and Settlement System established and
operated by HKSCC

“CCASS Clearing Participant”	 a person admitted to participate in CCASS as a direct
clearing participant or general clearing participant

“CCASS Custodian Participant”	 a person admitted to participate in CCASS as a custodian
participant

“CCASS Investor Participant”	 a person admitted to participate in CCASS as an investor
participant who may be an individual orj oint individuals or
a corporation

“CCASS Participant”	 a CCASS Clearing Participant, or a CCASS Custodian
Participant or a CCASS Investor Participant

“Chi na” or“PRC”	 the Peolbipe’s Relpuc of China excluding for the purpose of
this prospectus, Hong Kong, the Macau Special
Administrative Reion and Taigwan

“China Foreign Education”	 China Foreign Education Limited, a limited liability
company incorporated under the laws of the BVI on August
9, 2018 and is wholly owned by Ms. He Huifen, and is one
of our Controlling Shareholders

“Co-manager”	 the co-manager as named in the section headed “Directors
and Parties Involved in the Global Offering”

“Companies Act” or “Cayman
Companies Act”	the Companies Act, Cap. 22 (Act 3 of 1961, as combined
and revised) of the Cayman Islands


“window potential” of a chosen functional form. The form of this potential is given by:

\[ W _ { i } ( s ) = \left\{ \begin{array} { l l } { \infty , \qquad s < s _ { i } ^ { \mathrm { m i n } } } & { } \\ { 0 , \qquad s _ { i } ^ { \mathrm { m i n } } < s < s _ { i } ^ { \mathrm { m a x } } } & { } \\ { \infty , \qquad s > s _ { i } ^ { \mathrm { m a x } } } & { } \end{array} \right. \qquad ( 7 ) \]

where \( s _ { i } ^ { \mathrm { m i n } } \) and \( s _ { i } ^ { \mathrm { m a x } } \) are the limits that define the range of s for the i-th window. Within each “window” of s, a probability distribution \( p _ { i } ( s ) \) is calculated in the simu-lation. The window potential width, \( \Delta s \equiv s _ { i } ^ { \mathrm { m a x } } - s _ { i } ^ { \mathrm { m i n } } \), is chosen to be sufficiently small that the variation in F does not exceed a few \( k _ { \mathrm { B } } T \). Adjacent windows overlap, and the SCH algorithm uses the \( p _ { i } ( s ) \) histograms to re-construct the unbiased distribution, \( \mathcal { P } ( s ) \). The details of the histogram reconstruction algorithm are given in Ref. 46. A description for an application to a physical system comparable to that studied here is presented in Ref. 32.

Polymer configurations were generated carrying out single-monomer moves using a combination of trans-lational displacements and crankshaft rotations. The trial moves were accepted with a probability \( \begin{array} { r l } { p _ { \mathrm { a c c } } } & { { } = } \end{array} \)\( \operatorname* { m i n } ( 1 , e ^ { - \Delta E / k _ { \mathrm { B } } T } ) \), where \( \Delta F \) is the energy difference be-tween the trial and current states. Initial polymer con-figurations were generated such that s was within the allowed range for a given window potential. Prior to data sampling, the system was equilibrated. As an il-lustration, for a \( N \) = 121 polymer chain, the system was equilibrated for typically \( \sim \mathrm { 1 0 ^ { 7 } } \) MC cycles, following which a production run of \( \sim 1 0 ^ { 8 } \) MC cycles was carried out. During each MC cycle a move for each monomer is attempted once, on average.

The windows are chosen to overlap with half of the adjacent window, such that \( s _ { i } ^ { \mathrm { m a x } } = s _ { i + 2 } ^ { \mathrm { m i n } } \). The window width was typically \( \Delta s \, = \, \sigma \). Thus, a calculation for \( N \)= 121, where the translocation coordinate spans a range of \( s \, \in \, [ 0 , 1 2 0 ] \), required separate simulations for 239 different window potentials. For each simulation, individual probability histograms were constructed using the binning technique with 10 bins per histogram.

The free energy functions obtained from the MC sim-ulations were used with the procedure summarized in Sec. III to study the translocation dynamics under the as-sumption that conformational quasi-equilibrium is main-tained during the process. The translocation probability \( \mathcal { W } ( s , t ; s _ { 0 } , 0 ) \) was determined by solving Eq. (1) for a cho-sen value of \( s _ { 0 } \). Typically, we used \( s _ { 0 } = L / ( 2 \sigma ) \), at which point the first monomer isj ust on the verge of exiting the pore into the cavity. The equation was solved using standard numerical methods with a “spatial” grid size of \( \Delta s \) = 0.01 and a time increment of \( \Delta t = 0 . 0 0 2 \mathcal { D } ^ { - 1 } \). The distribution \( P ( \tau ) \) was calculated using Eq. (3), where a standard five-point method was used to evaluate the derivatives in Eq. (2). The translocation probability, \( p _ { b } \), and mean first passage time, \( \langle \tau \rangle \), were calculated by nu-merical integration of Eqs. (4) and (6), respectively, using Simpson’s rule.

In the results presented below, quantities of length are measured in units of \( \sigma \), energy in units of \( k _ { \mathrm { B } } T \), force in units of \( k _ { \mathrm { B } } T / \sigma \) and time in units of \( \mathcal { D } ^ { - 1 } \).

# V. RESULTS

We consider first the case of spherical cavities in the absence of a driving force or adsorption potential, i.e. \( r \) = 1, \( f _ { \mathrm { d } } \, = \, 0 \) and \( \epsilon \) = 0. Figure 2 shows free energy functions for cavity volumes of V =150, 250 and 500, each for polymer lengths ranging from N=31 to N=141. As expected, the free energy cost of confining the polymer in the cavity increases as the confinement volume decreases. In addition, the curves all have positive curvature every-where except at near the upper and lower bounds. This indicates that free energy cost of inserting each monomer into the cavity increases as the number (and hence den-sity) of monomers inside increases. This feature is con-sistent with results from previous MC studies27,32,33 and theoretical studies16,26 that explicitly account for repul-sion between monomers, in contrast to the case for ideal polymers.15 Another noteworthy feature is the strong de-gree of overlap between the curves for different N and the same V . Thus, the free energy cost of transferring one monomer from the outside to the inside of the cavity de-pends approximately only on the density of monomers in the cavity. Deviations from this trend are evident where F dips abruptly near \( s = N - \) 1.

FIG. 2. Free energy functions for several different polymer lengths for a cavity aspect ratio of \( r \) = 1. Results for three different cavity volumes are shown.

To provide a quantitative analysis of the free en-ergy functions, we employ a standard scaling theory approach.23 We first recall that the standard form of the entropic free energy barrier for translocation of a polymer through a narrow pore in a flat wall of negligible thick-ness is \( F _ { 0 } / k T = ( 1 - \lambda ) \ln [ m ( N - m ) ] \), where m segments lie on one side of the pore, and \( N - m \) lie on the other


and where \( \lambda \) = 0.69 is a critical exponent.1 This expres-sion can easily be modified to account for the case of a channel in a wall of finite thickness.45 To account for the effect of confinement of the monomers inside the cavity, we consider the case where this part of the polymer is in the semi-dilute regime. Here, the confined portion of the polymer can be viewed as a collection \( n _ { \mathrm { t } } \) blobs, each of size \( \xi \sim \sigma \phi ^ { \nu / ( 1 - 3 \nu ) } \), where \( \nu \) is the Flory exponent. It is easily shown that the confinement free energy scales as23 \( \Delta F _ { \mathrm { c } } / k T = n _ { \mathrm { b } } \approx ( V / \sigma ^ { 3 } ) ^ { - 1 / ( 3 \nu - 1 ) } m ^ { 3 \nu / ( 3 \nu - 1 ) } \), where m is the number of monomers in the cavity. For a finite length nanochannel that is spanned by an average of \( n _ { \mathrm { p } } \) bonds, we note that \( m = s - n _ { \mathrm { p } } / 2 \). For the pore length \( L \) = 1.3 used here, we estimate \( n _ { \mathrm { p } } \, = \, 2 \) when the pore is filled. Thus, the total free energy, F, is expected to satisfy

\[ ( F - F _ { 0 } ) / k T \approx ( V / \sigma ^ { 3 } ) ^ { - 1 . 2 5 } ( s - n _ { \mathrm { p } } / 2 ) ^ { 2 . 2 5 } , \qquad ( 8 ) \]

where we have used \( \nu \) =35. This approximation is valid when \( n _ { \mathrm { p } } / 2 \, < \, s \, < \, N \, - \, 1 \, - \, n _ { \mathrm { p } } / 2 \). Over most of the range of s, \( n _ { \mathrm { p } } \) is constant, the logarithmic term \( F _ { 0 } \) is negligible. Only near the upper and lower bounds of s is the variation of \( F _ { 0 } \) appreciable. This feature, as well as a partial emptying of the pore, accounts for the dips in F near \( s = N - \) 1. Otherwise F is dominated by the confinement free energy of the cavity. In the case of fixed V , F is predicted to increase with s independent of the polymer length N. In addition, the variation of F with s has positive curvature, and F increases with decreasing V . These predictions are qualitatively consistent with the data.

The use of the semi-dilute approximation to estimate free energy of confinement in the cavity is expected to be valid only over a restricted range of densities. In Ref. 48 it was shown that the predictions are valid only up to packing fractions of \( \phi \, \approx \) 0.15, where \( \phi ~ \equiv ~ \pi N \sigma ^ { 3 } / 6 V \). Beyond this value the number of monomers per blob is unacceptably low. A lower limit on \( \phi \) is imposed by the condition that the number of blobs, \( n _ { \mathrm { b } } = N \dot { \phi } ^ { 1 / ( 3 \nu - \ddot { 1 } ) } \), be sufficiently large. For the polymer lengths considered in this work, it is difficult to find a range of s that satisfies both conditions simultaneously. To analyze the data, we use a more relaxed condition for low density and consider the case where \( n _ { \mathrm { b } } \ge 3 \).

Figure 3 shows the results of fits using Eq. (8) for \( N \)= 121 and various cavity volumes. The free energy functions have been shifted by \( F _ { 0 } ( s ) \), which is the free energy function for a flat wall that was calculated ex-plicitly by simulation. We use a fitting function of the form \( F - F _ { 0 } = c _ { 0 } + c _ { 1 } ( s - 1 ) ^ { - \alpha } \). The lower limit of the range of the fit is indicated in the plot, while the fitting function is deliberately extrapolated beyond the upper limit of the fitting range to illustrate the divergence of the prediction from the simulation results at high den-sity. The upper limit itself is explicitly labeled for two of the functions. Note that scaling predictions underes-timate the free energy in the region where \( \phi \geq \) 0.15. This is consistent with the observation noted in Ref. 48 that the confinement free energy crosses over into a concen-trated regime where the excluded volume interactions are screened, which leads to a higher value of \( \alpha \). From the fit to the data in the valid range, it was found that \( ^ { \prime \prime } \)=1.9, 2.0 and 1.9 for V =150, 250 and 500, respectively. This is somewhat below the predicted value of \( ^ { o } \) = 2.25. Not-ing the expected dependence of \( c _ { 1 } \propto V ^ { - \beta } \) where \( \beta \)=1.25, the ratio of \( c _ { 1 } \) measured for V =500 and \( V \)=250 yields \( \beta \)= 0.9, while the ratio for V =500 and V =150 yields \( \beta \)=1.1. Thus, the measured values of the exponents \( \alpha \) and \( \beta \) both deviate from the predicted values. Undoubt-edly, this is arises from failing to properly satisfy the condition that \( n _ { \mathrm { b } } \gg 1 \). We speculate that better sat-isfying this condition would yield improved agreement. However, this would necessitate using polymer chains at least an order of magnitude larger than those considered here, which is not feasible for us at present.

FIG. 3. Free energy functions for polymers of length \( N \) = 121 and a spherical cavity of various volumes. The dashed black lines show fits to the data in the region for which \( n _ { \mathrm { b } } \ge 3 \) and \( \phi < \) 0.15. The lower limit of this range is evident from the minimum s for the fitting curves, and the upper end of this range is explicitly labeled for two of the curves. For V =500, the upper limit extends beyond the range of the data.

Next we consider the effects of the anisometry of the confining cavity. Figure 4 shows free energy functions for chains of length \( N \)= 101 in a cavity of volume \( V \)= 500. Figure 4(a) shows results for prolate ellipsoidal cavities (\( r > \) 1) and Fig. 4(b) shows results for oblate cavities (\( r < \) 1). In each case, the result for spherical cavities is also shown, for comparison. The most notable feature here is the fact that deviations from spherical symmetry in either direction lead to an increase in the free energy. Note, however, that the curves for oblate cavities follow the opposite trend at low s (see the inset of Fig. 4(b)), in contrast to the case for prolate cavities. The explana-tion for this difference is straightforward. As the first few monomers enter the cavity, the effects of confinement are felt mainly by the curvature of the cavity wall near the


The LMSR ships are not armed and do not have a combat system. They do have a \( \mathbf { C } ^ { 3 } \) I suite sufficient to perform their intended mission in conjunction with other naval vessels.

# BACKGROUND INFORMATION

The program currently plans for 19 ships, five of which are conversions of existing commercial container vessels, and 14 of which will be newly constructed ships. All 19 ships use common cargo handling systems procured by the Navy. Three contractors are building LMSRs. A performance type procurement description was used; therefore specific ship configurations differ as the respective builders interpret the mission requirements.

The current TEMP was approved in June 1996. In view of the single ship mission and similarities in the LMSR configurations, the test approach is for a single ship class, with four "flights." A mix of operational test events and operational assessments will address the minor hardware variance.

As non-developmental items, DT has been limited, focusing on production assurance testing in conjunction with the builders. Systems and integration testing is witnessed by Navy, U.S. Coast Guard, and American Bureau of Shipping representatives.

Operational Testing (OT-IIA) of the LSMR conversion ship was planned and administered in accordance with the DOT&E-approved TEMP and OT Plan. OT-IIA was conducted during September 1996, aboard United States Naval Ship (USNS) Shughart (T-AKR 295) at Savannah, GA and Norfolk, VA. The OT was conducted in conjunction with a planned Army sealift deployment exercise, which moved a representative load of Army equipment (over 1,000 pieces and included tanks, trucks and various helicopters) from the 3d Infantry Division in Savannah, GA to Ft. Story, VA. The USNS Shughart was assessed as operationally effective and potentially operationally suitable. No significant deficiencies were observed.

Due to cracking cloverleaf tie downs on the decks of the USNS BOB HOPE, the operational test (OT-IIB) scheduled for USNS BOB HOPE in July 1998, was rescheduled to 1QFY99. OT-IIB was subsequently rescheduled for 3QFY00 and the USNS FISHER was designated the OT-IIB test article.

# TEST & EVALUATION ACTIVITY

An OA of the first NASCO new construction LMSR ship, USNS WATSON, was conducted in FY99. Assessment and reporting of the assessment by the Multi-service Test Team have not been completed and will be reported in the FY00 Annual Report. Initial observations of the USNS WATSON loadout are: (1) the NASCO new construction LMSR ships are easier to load compared to the two classes of renovation LMSR ships previously evaluated; (2) the NASCO new construction LMSR ship holds approximately one-third more cargo than two renovation classes of LMSR ships; (3) efficient stow planning was hindered by inaccurate ship data (repeat finding); and (4) the final stowage plan did not appear to take full advantage of all available space (either additional equipment could have been stowed or available space could have been used to facilitate the exercise and maintenance of pre-positioned equipment).

The multi-Service Test Team spent most of this year refining plans for the OT-IIB to be conducted 3QFY00. To potentially reduce the scope of required testing on OT-IIB, plans were developed to capture useful pier-side on-load/off-load data from the BRIGHT STAR exercise in


1QFY00. That effort was intended to satisfy data requirements to assess two of the 17 critical operational issues associated with the Strategic Sealift Program. Although extremely useful for providing insights to the Strategic Sealift System, the BRIGHT STAR pier-side data collected was not sufficient to completely satisfy the two critical operational issues being examined. The scope of OT IIB will not be adjusted based on this data. It appears that OT IIB will slip yet again from the 3QFY00 date due to competing requirements for critical units needed for the major portions of the test.

# TEST & EVALUATION ASSESSMENT

Based on the results of OT-IIA, the strategic sealift ship (NASCO conversion) is assessed to be operationally effective and potentially operationally suitable. No significant deficiencies were observed however, limited strategic sealift “in-the-stream” data were collected during OT-IIA. Strategic sealift “in-the-stream” data need to be fully developed.

OT-IIB, scheduled to be conducted April-May 2000, is designed to examine the Avondale new construction ship as part of the strategic sealift system and focused on the surge sealift mission, as well as ship offload “in-the-stream.” A Strategic Sealift System shortfall currently being addressed, but not as part of the Strategic Sealift ship program, has to with the supporting lighterage. Shortfalls in the lighterage system (capability, inventory, and doctrine) could adversely affect the U.S.’s ability to project power in a timely manner in situations where adequate port facilities are not available. This situation is significant in that we may be able to get the force to a crisis in a timely fashion but, in some situations, be challenged to get the force off the ship. The overall class assessment will be made upon completion of the OT-IIB event and will include an evaluation of the ship’s ability to unload “in-the-stream” using current doctrine and presently fielded RO/RO Discharge Facilities. The class assessment will address the ship configurations from all three prime contractors.


Liabilities:

Commodity price derivative contracts	$    —	$        (99)	$    —	$            (99)

Interest rate derivative contracts	—	(257)	—	(257)

Total derivative instruments	$    —	$      (356)	$    —	$           (356)

The following table sets forth a reconciliation of changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy:

# 125

	2016	2015

(in thousands)

Unobservable inputs at January 1,	$         (5,933)	$        (6,470)

Total gains	11,838	5,151

Settlements	(5,905)	(4,614)

Unobservable inputs at December 31,	$      —	$         (5,933)

Change in fair value included in earnings related to
derivatives still held as of December 31,	$      —	$         (2,925)

During periods of market disruption, including periods of volatile oil and natural gas prices, there may be certain asset classes that were in active markets with observable data that become illiquid due to changes in the financial environment. In such cases, more derivative instruments, other than the range bonus accumulators, may fall to Level 3 and thus require more subjectivity and management judgment. Further, rapidly changing commodity and unprecedented credit and equity market conditions could materially impact the valuation of derivative instruments as reported within our consolidated financial statements and the period-to-period changes in value could vary significantly. Decreases in value may have a material adverse effect on our results of operations or financial condition.

We apply the provisions of ASC Topic 350 “Intangibles-Goodwill and Other.” Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired in business combinations. Goodwill is assessed for impairment annually on October 1 or whenever indicators of impairment exist. The goodwill test is performed at the reporting unit level, which represents our oil and natural gas operations in the United States. If indicators of impairment are determined to exist, an impairment charge is recognized if the carrying value of goodwill exceeds its implied fair value. We utilize a market approach to determine the fair value of our reporting unit. Any sharp prolonged decreases in the prices of oil and natural gas as well as any continued declines in the quoted market price of the Company’s units could change our estimates of the fair value of our reporting unit and could result in an impairment charge. We consider the fair value estimate for goodwill as a Level 3 input, as the valuation includes inputs and assumptions that are less observable or require greater estimation.

At the respective measurement dates of March 31, 2016, June 30, 2016, September 30, 2016 and December 31, 2016, the carrying value of our reporting unit was negative. Therefore the Company was required to perform the


second step of the goodwill impairment test at these interim dates. The fair value amount of the assets and liabilities were calculated using a combination of a market and income approach as follows: equity, debt and certain oil and gas properties were valued using a market approach while the remaining balance sheet assets and liabilities were valued using an income approach. Furthermore, significant assumptions used in calculating the fair value of our oil and gas properties include: (i) observable forward prices for commodities at the respective measurement date and (ii) a 10% discount rate, which was comparable to discount rates on recent transactions. Based on the results of the the second step of the interim goodwill impairment test, we recorded a non-cash goodwill impairment loss of \$252.7 million during the quarter ended September 30, 2016 to write the goodwill down to its estimated fair value of \$253.4 million. Based on our estimates, the implied fair value of our reporting unit exceeded its carrying value at the measurement dates of March 31, 2016, June 30, 2016, and December 31, 2016, therefore no additional impairment loss was recorded for the year ended December 31, 2016. Based on evaluation of qualitative factors, we determined that the goodwill impairment was primarily a result of the decline in the prices of oil and natural gas as well as deteriorating market conditions and the decline in the market price of our common units. Any further significant decline in the prices of oil and natural gas as well as any continued declines in the quoted market price of the Company’s units could change our estimate of the fair value of the reporting unit and could result in an additional impairment charge.

Our nonfinancial assets and liabilities that are initially measured at fair value are comprised primarily of assets acquired in business combinations and asset retirement costs and obligations. These assets and liabilities are recorded at fair value when acquired/incurred but not re-measured at fair value in subsequent periods. We classify such initial measurements as Level 3 since certain significant unobservable inputs are utilized in their determination. A reconciliation of the beginning and ending balance of our asset retirement obligations is presented in Note 7, in accordance with ASC Topic 410-20 “Asset Retirement Obligations.” During the years ended December 31, 2016 and 2015, in connection with the oil and natural gas properties acquired in all of our acquisitions, the LRE and Eagle Rock Mergers, as well as new wells drilled during each year, we incurred and recorded asset retirement obligations totaling \$0.7 million and \$90.9 million, respectively, at fair value. We also recorded a \$1.3 million and a \$22.3 million change in estimate as a result of revisions to the timing or the amount of our original undiscounted estimated asset retirement costs during the years ended December 31, 2016 and 2015, respectively. The

# 126

fair value of additions to the asset retirement obligation liability and certain changes in the estimated fair value of the liability are measured using valuation techniques consistent with the income approach, converting future cash flows to a single discounted amount. Inputs to the valuation include: (1) estimated plug and abandonment cost per well based on our experience; (2) estimated remaining life per well based on average reserve life per field; (3) our credit-adjusted risk-free interest rate ranging between 4.6% and 5.5%; and (4) the average inflation factor (2.0%). These inputs require significant judgments and estimates by the Company’s management at the time of the valuation and are the most sensitive and subject to change.

# 7. Asset Retirement Obligations

The asset retirement obligations as of December 31, 2016 and 2015, reported on our Consolidated Balance Sheets and the changes in the asset retirement obligations for the year ended December 31, 2016 were as follows:

	2016	2015


# 45 Subsidiaries (Continued)

# (a) Particulars of principal subsidiaries of the Group at 31 December 2018 are set out below (continued):

Name	Place of incorporation
and legal status	Principal activities/
place of operation	Proportion of
ordinary shares
directly held
by parent (%)	Proportion of
ordinary shares
held by the
Group (%)	Proportion of
ordinary shares
held by
non -controlling
interests (%)

中山市凱茵豪園房地產開發有限公司
 Zhongshan Greenville Realty
 Development Co., Ltd. (note (i))	PRC/wholly foreign
 owned enterprise	Property development/
 Mainland China	—	100%	 —

中山市雅建房地產發展有限公司
 Zhongshan Ever Creator Real Estate
 Development Co., Ltd. (note (i))	PRC/wholly foreign
 owned enterprise	Property development/
 Mainland China	—	100%	 —

廣州雅居樂房地產開發有限公司
 Guangzhou Agile Real Estate
 Development Co., Ltd. (note (i))	PRC/wholly foreign
 owned enterprise	Property development/
 Mainland China	—	100%	 —

佛山市雅居樂房地產有限公司
 Foshan Agile Real Estate Development
 Co., Ltd. (note (i))	PRC/wholly foreign
 owned enterprise	Property development/
 Mainland China	—	100%	 —

南京雅居樂房地產開發有限公司
 Nanjing Agile Real Estate Development
 Co., Ltd. (note (i))	PRC/wholly foreign
 owned enterprise	Property development/
 Mainland China	—	100%	 —

河源市雅居樂房地產開發有限公司
 Heyuan Agile Real Estate Development
 Co., Ltd. (note (i))	PRC/wholly foreign
 owned enterprise	Property development/
 Mainland China	—	100%	 —

海南清水灣控股有限公司
 Hainan Clearwater Bay Holdings Limited	BVI/Limited liability
 company	Investment holding/BVI	 —	100%	 —

海南雅居樂房地產開發有限公司
 Hainan Agile Real Estate Development
 Co., Ltd. (“Hainan Agile”) (note (i))	PRC/foreign invested
 enterprise	Property development/
 Mainland China	—	100%	 —


# 45 Subsidiaries (Continued)

# (a) Particulars of principal subsidiaries of the Group at 31 December 2018 are set out below (continued):

Name	Place of incorporation
and legal status	Principal activities/
place of operation	Proportion of
ordinary shares
directly held
by parent (%)	Proportion of
ordinary shares
held by the
Group (%)	Proportion of
ordinary shares
held by
non -controlling
interests (%)

海南雅恒房地產發展有限公司
 Hainan Yaheng Real Estate Development
 Co., Ltd. (“Hainan Yahen”g) (note (i))	PRC/foreign invested
 enterprise	Property development/
 Mainland China	—	100%	 —

廣州從化雅居樂房地產開發有限公司
 Guangzhou Conghua Agile Real Estate
 Development Co., Ltd. (note (i))	PRC/wholly foreign
 owned enterprise	Property development/
 Mainland China	—	100%	 —

四川雅居樂房地產開發有限公司
 Sichuan Agile Real Estate Development
 Co., Ltd. (note (i))	PRC/wholly foreign
 owned enterprise	Property development/
 Mainland China	—	100%	 —

佛山巿三水雅居樂房地產有限公司
 Foshan Sanshui Agile Real Estate
 Development Co., Ltd. (note (i))	PRC/wholly foreign
 owned enterprise	Property development/
 Mainland China	—	100%	 —

惠州白鷺湖旅遊實業開發有限公司
 Huizhou Bailuhu Tour
 Enterprise Development Co., Ltd.
 (note (i))	PRC/foreign invested
 enterprise	Property development/
 Mainland China	—	100%	 —

陝西昊瑞房地產開發有限責任公司
 Shanxi Haorui Real Estate Development
 Co., Ltd. (note (i))	PRC/limited liability
 Company	Property development/
 Mainland China	—	100%	 —

上海靜安城投重慶置業有限公司
 Sh’anghai Jingan Chengtou Chongqing
 Land Co., Ltd. (note (i))	PRC/wholly foreign
 owned enterprise	Property development/
 Mainland China	—	100%	 —

上海雅恒房地產開發有限公司
 （前稱上海金昌房地產開發有限公司)
 Shanghai Yaheng
 Real Estate
 Development Co., Ltd.
 (formerly named Shanghai Jinchang Real
 Estate Development Co., Ltd.) (note (i))	PRC/wholly foreign
 owned enterprise	Property development/
 Mainland China	—	100%	 —


账 龄	期初数

金 额	比例%	坏账准备	计提比例%	净额

1 年以内	540,936,364.55	63.68	27,046,818.23	5	513,889,546.32

1 至 2 年	305,112,092.71	35.92	30,511,209.27	10	274,600,883.44

2 至 3 年	2,069,859.94	0.24	413,971.99	20	1,655,887.95

3 至 4 年	108,678.27	0.01	32,603.48	30	76,074.79

4 至 5 年	1,240,655.95	0.15	744,393.57	60	496,262.38

合 计	849,467,651.42	100.00	58,748,996.54	6.92	790,718,654.88

# ②本期计提、收回或转回的坏账准备情况

项目	期初余额	本期增加	本期减少	期末余额

本期计提	转回	转销

坏账准备	58,748,996.54	34,007,003.55	10,944,431.21	-	81,811,568.88

# ③其他应收款按款项性质披露

项 目	期末余额	期初余额

单位往来	800,716,921.32	847,373,071.49

个人往来	6,370,045.55	2,094,579.93

合 计	807,086,966.87	849,467,651.42

# ④按欠款方归集的其他应收款期末余额前五名单位情况

本期按欠款方归集的期末余额前五名其他应收款汇总金额 434,096,527.04 元，占其他应收款期末余额合计数的比例 53.79%，相应计提的坏账准备期末余额汇总金额 49,842,674.95 元。

# 3、长期股权投资

项 目	期末数	期初数

账面余额	减值准备	账面价值	账面余额	减值准备	账面价值

对子公司投资	238,088,083.85	446,440.50	237,641,643.35	221,703,032.07	446,440.50	221,256,591.57

对合营企业投资	43,614,806.30	-	43,614,806.30	41,687,701.81	-	41,687,701.81

对联营企业投资	400,000.00	400,000.00	-	400,000.00	400,000.00	-

合 计	282,102,890.15	846,440.50	281,256,449.65	263,790,733.88	846,440.50	262,944,293.38

# （1）对子公司投资

被投资单位	期初余额	本期增加	本期
减少	期末余额	本期计提
减值准备	减值准备
期末余额

金坛思源节能科技有
限公司	10,000,000.00	-	-	10,000,000.00	-	-


正信太阳能光伏日本
有限公司（正信ソー
ラージパャン株式会
社）	446,440.50	-	-	446,440.50	-	446,440.50

正信（香港）投资有
限公司 (ZNSHINE
(HONGKONG)
INVESTMENT LIMITED)	47,856,389.02	-	-	47,856,389.02	-	-

嘉兴正信光伏科技有
限公司	13,117,464.55	4,918,968.98	-	18,036,433.53	-	-

常州正信电力科技有
限公司	150,000,000.00	-	-	150,000,000.00	-	-

陕西秦璞建设工程有
限公司	237,738.00	-	-	237,738.00	-	-

常州正信电力建设有
限公司	2,000.00	-	-	2,000.00	-	-

常州金坛正信小宝电
力科技有限公司	43,000.00	67,423.98	-	110,423.98	-	-

德信泰和（山东）科
技股份有限公司	-	11,398,658.82	-	11,398,658.82	-	-

合 计	221,703,032.07	16,385,051.78	-	238,088,083.85	-	446,440.50

# （2）对联营、合营企业投资详见本报告附注五、9。

# 4、营业收入和营业成本

项 目	本期发生额	上期发生额

收入	成本	收入	成本

主营业务	1,279,517,887.66	1,093,808,936.99	1,170,517,207.95	989,983,618.43

其他业务	27,233,240.77	26,037,734.21	1,510,759.83	-

合 计	1,306,751,128.43	1,119,846,671.20	1,172,027,967.78	989,983,618.43

# 5、投资收益

项 目	本期发生额	上期发生额

权益法核算的长期股权投资收益	1,927,104.49	-608,972.64

处置以公允价值计量且其变动计入当期损益的
金融资产取得的投资收益	4,338,745.57	-

理财收益	-	77,247.80

合 计	6,265,850.06	-531,724.84

# 十五、补充资料

# 1、当期非经常性损益明细表

项 目	本期发生额	说明


类 别	2021 年 12 月 31 日

账面余额	坏账准备	账面价值

金额	比例(%)	金额	计提比例(%)

按组合计提坏账准备	120,861.42	19.96	1,847.01	1.53	119,014.41

1.账龄组合	120,861.42	19.96	1,847.01	1.53	119,014.41

合计	605,664.50	100.00	486,650.09	80.35	119,014.41

（续上表）

类 别	2020 年 12 月 31 日

账面余额	坏账准备	账面价值

金额	比例(%)	金额	计提比例(%)

按单项计提坏账准备	484,803.08	65.79	484,803.08	100.00

按组合计提坏账准备	252,083.43	34.21	2,655.23	1.05	249,428.20

1.账龄组合	252,083.43	34.21	2,655.23	1.05	249,428.20

合计	736,886.51	100.00	487,458.31	66.15	249,428.20

坏账准备计提的具体说明：

# ①于 2021 年 12 月 31 日，按单项计提坏账准备的应收账款

账 龄	2021 年 12 月 31 日

账面余额	坏账准备	计提比例（%）

深圳笔架山娱乐公司	172,000.00	172,000.00	100.00

龚炎清	97,806.64	97,806.64	100.00

广州乐敏电脑中心	86,940.00	86,940.00	100.00

其他	128,056.44	128,056.44	100.00

合计	484,803.08	484,803.08	100.00

# ②于 2021 年 12 月 31 日，按账龄计提坏账准备的应收账款

账 龄	2021 年 12 月 31 日	2020 年 12 月 31 日

账面余额	坏账准备	计提比例（%）	账面余额	坏账准备	计提比例
（%）

1 年以内	117,501.42	1,175.01	1.00	248,723.43	2,487.23	1.00

1-2 年				3,360.00	168.00	5.00

2-3 年	3,360.00	672.00	20.00


账 龄	2021 年 12 月 31 日	2020 年 12 月 31 日

账面余额	坏账准备	计提比例（%）	账面余额	坏账准备	计提比例
（%）

3 年以上

合计	120,861.42	1,847.01	1.53	252,083.43	2,655.23	1.05

按组合计提坏账准备的确认标准及说明见附注三、10。

# （3）本期坏账准备的变动情况

类 别	2020 年 12 月
31 日	会计政策
变更	2021 年 1 月 1
日	本期变动金额	2021 年 12
月31日

计提	收回或转回	转销或核销

按单项计提
坏账准备	484,803.08		484,803.08				484,803.08

按组合计提
坏账准备	2,655.23		2,655.23	-808.22			1,847.01

合计	487,458.31		487,458.31	-808.22			486,650.09

# （3）按欠款方归集的期末余额前五名的应收账款情况

单位名称	余额	占应收账款余额的
比例（%）	坏账准备余额

深圳市金城银域珠宝首饰有限公司	117,501.42	19.40	1,175.01

深圳笔架山娱乐公司	172,000.00	28.40	172,000.00

龚炎清	97,806.64	16.15	97,806.64

广州乐敏电脑中心	86,940.00	14.35	86,940.00

兰州大船电子公司	37,308.00	6.16	37,308.00

合计	511,556.06	84.46	395,229.65

# 2. 其他应收款

# （1）分类列示

项 目	2021 年 12 月 31 日	2020 年 12 月 31 日

应收利息

应收股利	547,184.35	547,184.35

其他应收款	89,854,408.23	126,422,912.78

合计	90,401,592.58	126,970,097.13

# （2）应收股利