(9)	Filed as Exhibit No. 10.2 to the C’ompanys Quarterly Report on Form 10-Q for the quarterly period ended
August 28, 2015, as filed with the Commission on September 29, 2015 (commission file number 001-13873),
and incorporated herein by reference.

(10)	Filed as Exhibit No. 10.3 to the C’ompanys Quarterly Report on Form 10-Q for the quarterly period ended
November 28, 2008, as filed with the Commission on January 7, 2009 (commission file number 001-13873),
and incorporated herein by reference.

(11)	Filed as Exhibit No. 10.4 to the C'ompanys Quarterly Report on Form 10-Q for the quarterly period ended
November 28, 2008, as filed with the Commission on January 7, 2009 (commission file number 001-13873),
and incorporated herein by reference.

(12)	Filed as Exhibit No. 10.1 to the C'ompanys Quarterly Report on Form 10-Q for the quarterly period ended
August 24, 2012, as filed with the Commission on October 1, 2012 (commission file number 001-13873), and
incorporated herein by reference.

(13)	Filed as Exhibit No. 10.1 to the C'ompanys Quarterly Report on Form 10-Q for the quarterly period ended
November 28, 2014, as filed with the Commission on December 23, 2014 (commission file number
001-13873), and incorporated herein by reference.

(14)	Filed as Exhibit No. 10.8 to the C’ompanys Annual Report on Form 10-K for the fiscal year ended
February 27, 1998, as filed with the Commission on May 28, 1998 (commission file number 001-13873), and
incorporated herein by reference.

(15)	Filed as Exhibit No. 10.2 to the C'ompanys Quarterly Report on Form 10-Q for the quarterly period ended
August 24, 2012, as filed with the Commission on October 1, 2012 (commission file number 001-13873), and
incorporated herein by reference.

(16)	Filed as Exhibit No. 10.1 to the C’ompanys Form 8-K, as filed with the Commission on February 9, 2007
(commission file number 001-13873), and incorporated herein by reference.

(17)	Filed as Exhibit No. 10.6 to the C’ompanys Quarterly Report on Form 10-Q for the quarterly period ended
August 29, 2008, as filed with the Commission on October 7, 2008 (commission file number 001-13873), and
incorporated herein by reference.

(18)	Filed as Exhibit No. 10.1 to the C'ompanys Quarterly Report on Form 10-Q for the quarterly period ended
August 28, 2009, as filed with the Commission on October 5, 2009 (commission file number 001-13873), and
incorporated herein by reference.

(19)	Filed as Exhibit No. 10.2 to the C'ompanys Quarterly Report on Form 10-Q for the quarterly period ended
November 27, 2009, as filed with the Commission on January 5, 2010 (commission file number 001-13873),
and incorporated herein by reference.

(20)	Filed as Exhibit No. 10.19 to the C’ompanys Annual Report on Form 10-K for the fiscal year ended
February 28, 2003, as filed with the Commission on May 16, 2003 (commission file number 001-13873), and
incorporated herein by reference.

(21)	Filed as Exhibit No. 10.33 to the C’ompanys Annual Report on Form 10-K for the fiscal year ended
February 25, 2005, as filed with the Commission on May 6, 2005 (commission file number 001-13873), and
incorporated herein by reference.

(22)	Filed as Exhibit No. 10.01 to the C’ompanys Quarterly Report on Form 10-Q for the quarterly period ended
May 27, 2005, as filed with the Commission on July 1, 2005 (commission file number 001-13873), and
incorporated herein by reference.

(23)	Filed as Exhibit No. 10.7 to the C’ompanys Quarterly Report on Form 10-Q for the quarterly period ended
August 29, 2008, as filed with the Commission on October 7, 2008 (commission file number 001-13873), and
incorporated herein by reference.

(24)	Filed as Exhibit No. 10.18 to the C’ompanys Annual Report on Form 10-K for the fiscal year ended
February 24, 2012, as filed with the Commission on April 23, 2012 (commission file number 001-13873), and
incorporated herein by reference.

(25)	Filed as Exhibit No. 10.1 to the C’ompanys Form 8-K, as filed with the Commission on January 16, 2015
(commission file number 001-13873), and incorporated herein by reference.

(26)	Filed as Exhibit No. 10.1 to the C’ompanys Form 8-K, as filed with the Commission on July 16, 2012
(commission file number 001-13873), and incorporated herein by reference.


the industry appears to be poised on the brink of a series of lurches and halts in performance improvements through concurrent execution and tool imple-mentation changes during which code bases will need to be modernized to operate correctly and securely.

Unfortunately, developing concurrent systems remains difficult and error prone for the vast majority of programmers; we still lack a programming model that enables the widespread adoption of concurrency. With the pos-sible exception of lambdas in C++, the approaches to multithreading adopted by the C and C++ standards are largely the same approaches that developers have struggled with for years without success. The application development and programming language development communities are well aware of this issue and have proposed many solutions such as Cilk, Intel Threading Build-ing Blocks, OpenMP, QtConcurrent, and so forth. There is limited experience with these various approaches. To date, no cost-effective solution appears to solve the fundamental problem that programmers have difficulty reasoning about concurrency.

So what happens when the increased pressure to adopt concurrency encounters the inability of developers to program concurrently? Expressed lightly, hilarity ensues. Concurrency is likely to be the source of a large num-ber of vulnerabilities in the years to come as we struggle to discover which approaches will succeed and which will be left by the wayside.


# 8

# File I/O

# with David Riley and David Svoboda1

But, when I came,—some minute ere the time Of her awakening,—here untimely lay The noble Paris and true Romeo, dead.

—William Shakespeare, Romeo and Juliet, act V, scene 3

C and C++ programs commonly read and write to files as part of their nor-mal operations. Numerous vulnerabilities have resulted from irregularities in how these programs interact with the file system—the operation of which is defined by the underlying operating system. Most commonly, these vulnerabil-ities result from file identification issues, poor privilege management, and race conditions. Each of these topics is discussed in this chapter.

# ■ 8.1 File I/O Basics

Performing file I/O securely can be a daunting task, partly because there is so much variability in interfaces, operating systems, and file systems. For exam-ple, both the C and POSIX standards define separate interfaces for performing

---

1. David Riley is a professor of computer science at the University of Wisconsin–LaCrosse. David Svoboda is a member of the technical staff for the SEI’s CERT.


# 36. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)

# (c) Total cash outflow for leases

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

	2020	2019

RMB’000	RMB’000

Within financing activities	(3,558)	(7,333)

# 37. CONTINGENT LIABILITIES

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

	2020	2019

RMB’000	RMB’000

Guarantees given to a bank in connection with loans
granted to an associate	15,100	33,500

Counter-guarantees given to a security company
in connection with loans granted to a subsidiary	6,000	3,000

	21,100	36,500

As at 31 December 2020, the banking facilities guaranteed by the Group to Sinofn Tianjin were utilised to the extent of approximately RMB15,100,000 (2019: RMB33,500,000).

# 38. PLEDGE OF ASSETS

Details of the Group’s assets pledged for the Group’s bank and other loans are included in note 13 to the financial statements.


# 39. COMMITMENTS

# (a) The Group had the following capital commitments at the end of the reporting period:

	2020	2019

RMB’000	RMB’000

Contracted, but not provided for:

Know-how, patents and license	1,900	1,400

On 9 December 2004, the Company and its substantial shareholder, IBP, entered into an exclusive technology licensing agreement (the “Licensing Agreement”) with regard to the production of diagnostic reagents by employing the technologies owned by IBP (the “Reagent Technologies”). Pursuant to the Licensing Agreement, the Company is required to pay a fee of RMB500,000 per annum to IBP for 20 years, commencing on the effective date of the Licensing Agreement. As at 31 December 2020, the technical service fees payable by the Group of RMB2,500,000 (31 December 2019: RMB2,000,000) were included in the amount due to a shareholder in note 28(c) to the financial statements.

In addition, the Group’s share of the joint ventures’ own capital commitments, which are not included in the above, is as follows:

	2020	2019

RMB’000	RMB’000

Contracted, but not provided for	20,084	5,100

(b) The Group has various lease contracts that have not yet commenced as at 31 December 2020. The future lease payments for these non-cancellable lease contracts are RMB3 million due within one year and RMB11 million due in the second to fifth years.


# Contingent liabilities

At the end of the Reporting Period, the Group had no significant contingent liabilities.

# Commitments

At the end of the Reporting Period, there were no significant capital commitments for the Group.

# Charges on group assets

Assets with a carrying value of approximately HK\$37,174,000 were pledged as security for the Group’s banking facilities.

# Treasury policies

The Directors will continue to follow a prudent policy in managing the Group’s cash balances and maintain a strong and healthy liquidity to ensure that the Group is well placed to take advantage of growth opportunities for the business. Interest for the current bank borrowings were mainly on floating rate basis and the bank borrowings were principally denominated in Hong Kong dollar, hence, there is no significant exposure to foreign exchange rate fluctuations.

# Exchange risk exposure

The Group’s foreign exchange risk mainly arises from balances denominated in Renminbi, which relates to the Group’s foreign currency denominated monetary assets and liabilities for the Group’s operating activities.

The Group currently does not have a foreign currency hedging policy to eliminate the currency exposures. However, the management monitors the related foreign currency exposure closely and will consider hedging significant foreign currency exposures should the need arise.

# Capital structure of the Group

There is no change in capital structure of the Group during the year ended 31 March 2020.


# PROSPECTS

# (i) Construction Business

The Group will uphold an on-going parallel development of its construction business (including building construction, interior fitting-out works and E&M works) in the PRC, Hong Kong and Macau. To cope with the difficulties encountered in the construction and engineering industry, the Group has adopted a prudent strategy in project tendering.

With its proven track records and adequate expertise in the main contracting business, the Group was included in Building Category Group C of the “List of Approved Contractors for Public Works”, and Turn-key Interior Design and Fitting-out Works Category Group II of the “List of Approved Suppliers of Materials and Specialist Contractors for Public Works” under Development Bureau of Hong Kong Special Administrative Region (the “HKSAR”); the Registered General Building Contractor, the Minor Works Class I Contractor, the Registered Specialist Contractor (Site Formation Works and Foundation Works Categories) under the Buildings Department.

In the E&M works, the Group was included in 11 categories of the “List of Approved Suppliers of Materials and Specialist Contractors for Public Works” under Development Bureau of the Government of the HKSAR; and the Registered Specialist Contractor (Ventilation) and Minor Works Class III Type E Contractor under Building Department.

The Group is able to take an active part in the construction business development.


# Chapter 48

I connected with Bella through her machine. She hadn’t returned any of the messages I’d left since she took 28 FPS away from me, but I recorded a few lines about wanting to discuss something Ryan had told me the last time I saw him alive and she was on the line before midday.

We sat in her video suite, the obvious place. Bella had her hair tied back and was wearing a robe with nothing on underneath. As she shifted position in her chair the silky material slipped open to show her cunt. She didn’t bother to cover herself and I caught the scent of fish.

I played my cassette and explained how there should have been stitches on Karen’s belly. Bella spent more time watching me than the screen and the satisfied look on her face gave me a bad feeling that things weren’t going to go quite as well as I’d hoped. For an absurd moment the whole purpose of the meeting seemed to have been reversed; that rather than accusing her of murder, I was there to admit my guilt at being in possession of something dangerous to her. I did my best to fight it down, but I knew my voice sounded weak.

“Ryan had it figured the night you killed him, it took me a little longer. What did you think, we weren’t going to see it?”

“Oh, I thought you’d see it all right. But I was quite sure you’d be reluctant to recognize it.”

“Because of your money?”

“You and Ryan were very similar. You see money as life’s ultimate validation. It makes you easy to predict.”

“Powell didn’t kill Karen.”


“No, he didn’t.”

“You made this tape. You knew he’d take a copy and that sooner or later we’d find it. And you knew how we’d read it.”

“I knew how you’d want to read it.”

“How long had you been planning it?”

“Killing Karen? I didn’t really plan it at all.”

“But the tape was made before you took her kidney out.”

“The tape was just one I had, it wasn’t part of any plan, at least not until later. I shot it in Powell’s apartment to hurt him, to rub salt in the wound, so to speak. That’s all. The planning only came after I realized what it could be used for. Erase my copy, make up a story about the bracelet.... Almost too easy.”

“Why did you kill her?”

“Do you care?”

I didn’t say anything. Bella shrugged, rewound the tape and started it playing again, this time in slow motion. She watched it as she spoke.

“Karen came back much sooner than I’d expected. We hadn’t planned to meet again until a couple of weeks after she’d recovered from her operation, but she had some trouble at home. The man she was living with threw her out and she had nowhere to go. I let her stay, of course. But knowing she was accessible, that she was a woman who had no real prohibitions against selling parts of herself, was a constant temptation. The door had already been opened, you see, and I wanted to go back. After a week I offered to buy her appendix and she agreed.”

“Only you didn’t stop with her appendix.”

“No. It’s a much simpler operation to perform, so I was working without Powell. I hadn’t planned to do anything other than what I’d paid for. But being there alone, with her laid out on the table so...available, it seemed cowardly to limit myself once I’d started. I took out almost everything she had.”

“But why?”

“I’ve told you before the operations are a test, even with outcasts they require an effort of will. With Karen, when I took her kidney, I moved to another level. She wasn’t anonymous. She was


As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

•	 Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

•	 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

•	 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

•	 Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

•	 Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial represent the underlying transactions and events in a manner that achieves fair presentation.

•	 Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.


We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Chan Chi Yuen.

Ascenda Cachet CPA Limited

Certified Public Accountants

Chan Chi Yuen

Practising Certificate Number P02671

Hong Kong

30 June 2017


	Successor	Predecessor

September 27-
October 27, 2013	April 29-
September 26, 2013	Six
Months Ended
October 28, 2012

(in millions)

Service cost	$           3.3	 $         22.6	 $         23.6

Interest cost	7.2	32.8	37.4

Expected return on lpan assets	(6.5)	(35.4)	(39.4)

Net amortization	—	24.8	26.4

Net periodic pension cost	$          4.0	 $         44.8	 $         48.0

# NOTE 10: EQUITY

# Common Stock

As a result of the Merger, all outstanding common stock of the Company during the Predecessor period was acquired by Shuanghui and retired. See Note 2—Merger and Acquisition for further information on the Merger.

As a result of the Merger, all of the outstanding shares of Merger Sub were converted into 1,000 shares of common stock of the Company, no par value, and such shares are owned by a wholly owned subsidiary of Shuanghui. There are no other shares of stock outstanding in the Company.

# Stock Options and Performance Share Units

At October 27, 2013, the Company has no outstanding stock option awards or performance share units and no new equity plans have been approved by the Board of Directors.


# Other Comprehensive Income (Loss)

The following tables present changes in the accumulated balances for each component of other comprehensive income (loss) and the related effects on net income of amounts reclassified out of other comprehensive income (loss).

	Successor	Predecessor

September 27-
October 27, 2013	July 29-
September 26,
2013	Three Months
Ended October 28,
2012

Before
Tax	 Tax	After
Tax	Before
Tax	 Tax	After
Tax	Before
Tax	After
 Tax   Tax

(in millions)

Foreign currency translation:

Translation adjustment arising during
the period	$   28.9	 $   (1.0)	$   27.9	 $   16.2	 $   (3.6)	$   12.6	 $   51.5	 $   (2.0)	$ 49.5

Pension accounting:

Amortization of actuarial losses and
prior service credits reclassified to
cost of sales	—	 —	 —	3.1	(1.2)	1.9	(1.3)	0.5	(0.8)

Amortization of actuarial losses and
prior service credits reclassified to
SG&A	—	 —	 —	6.8	(2.7)	4.1	14.5	(5.7)	8.8

Hedge accounting:

Gains (losses) arising during the period	(6.9)	2.8	(4.1)	(16.5)	6.5	(10.0)	(4.2)	2.0	(2.2)

Gains reclassified to sales	(0.2)	 —	(0.2)	3.2	(1.3)	1.9	(25.6)	10.0	(15.6)

Gains reclassified to cost of sales	0.1	(0.1)	 —	1.4	(0.5)	0.9	(18.9)	7.4	(11.5)

Losses reclassified to SG&A	—	 —	 —	0.2	 —	0.2	0.4	 —	0.4

Total other comprehensive income
(loss)	$   21.9	 $    1.7	 $   23.6	 $ 14.4	 $   (2.8)	$   11.6	 $ 16.4	 $   12.2	 $   28.6


# Prepayments, deposits and other receivables

Prepayments, deposits and other receivables consist primarily of deposits paid to suppliers, value-added tax receivables, loans receivables and prepayments. Prepayments, deposits and other receivables amounted to US\$80 million, US\$75 million and US\$365 million as of December 31, 2011, 2012 and 2013, respectively. Prepayments, deposits and other receivables remained relatively stable as of December 31, 2011 and 2012. Prepayments, deposits and other receivables increased as of December 31, 2013 primarily as a result of the completion of our acquisition of Smithfield and consisted largely of loans receivables, deposits paid to suppliers and value-added tax receivables.

# Trade and bills payables

Trade and bills payables consist primarily of payables to suppliers. Trade and bills payables amounted to US\$300 million, US\$225 million and US\$851 million as of December 31, 2011, 2012 and 2013, respectively. Trade and bills payables decreased from US\$300 million as of December 31, 2011 to US\$225 million as of December 31, 2012 primarily due to our efforts in optimizing our supply chain management in 2012. These measures included reducing bulk orders to our suppliers, which increased the frequency of orders but shortened the settlement period of each order. Trade and bills payables increased from US\$225 million as of December 31, 2012 to US\$851 million as of December 31, 2013 primarily as a result of the completion of our acquisition of Smithfield.

The following table sets forth our average trade and bills payables, cost of sales and trade and bills payables turnover days as of the dates indicated.

	As of December 31,

2011	2012	2013

(US$ million)

(1)A verage trade and bills payables ..........	275.0	262.5	538.0

Cost of sales ...........................	4,865	5,244	9,457

(2)Trade and bill s payables days ............	20.6	18.3	20.8

Notes:

(1) Average of beginning and ending balances of total trade and bills payables in the period indicated.

(2) Calculated as the average balances of total trade and bills payables, divided by the total cost of sales in the year (before biological assets fair value adjustments), multiplied by 365.


Trade and bills payables days decreased from 20.6 days in 2011 to 18.3 days in 2012 due primarily to our successful implementation of the aforementioned policies in optimizing our supply chain management in 2012. Trade and bills payable days increased from 18.3 days in 2012 to 20.8 days in 2013 primarily as a result of the impact from our acquisition of Smithfield. Trade and bills payable days in our operations in China was 13.8 days as of December 31, 2013.

The following table sets forth an aging analysis of our trade and bills payables for the periods indicated.

	As of December 31,

2011	2012	2013

(US$ million)

(audited)	 (audited)	 (audited)

0 to 30 days. . . . . . . . . . . . . . . . . . . . . . . . . . . .	274	188	756

31 to 90 days. . . . . . . . . . . . . . . . . . . . . . . . . . .	 —	28	87

91 to 180 days..........................	 —	9	8

181 days to 1 year . . . . . . . . . . . . . . . . . . . . . . .	26	 —	 —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	300	225	851

The credit period on our purchases of goods in our China operations is approximately 30 days. In our U.S. and international operations, credit terms vary based on goods and vendor and payables are typically paid in approximately 15 days.

# Accrued expenses and other payables

Accrued expenses and other payables consist primarily of accrued staff costs such as salaries, deposits received from customers, payables in respect of acquisition of property, plant and equipment, insurance payables, sales rebates payables, dividends payable and interest payables.


Meeting of the Remuneration Committee shall be held at least once a year. One meeting of the Remuneration Committee was held during the Year. The attendance records of each member of the Remuneration Committee at the said meeting are as follows:-

Name of the Directors	Attendance/
Number of
Remuneration
Committee meetings

Executive Director

Mr. Chu King Tien	1/1

Independent non-executive Directors

Mr. Hui Kwok Wah (Chairman)	1/1

Mr. Ma Sai Yam	1/1

During the Year, the Remuneration Committee has, among other things, reviewed the remuneration package of the Directors and senior management of the Group and recommendation was made to the Board in relation to their remuneration package.

# Nomination Committee

The Company has established a nomination committee (the “Nomination Committee”) on 15 May 2015 with written terms of reference in compliance with the Listing Rules. The Nomination Committee comprises one executive Director namely, Mr. Chu King Tien and two independent non-executive Directors, namely, Mr. Hui Kwok Wah and Mr. Ma Sai Yam, with Mr. Chu King Tien being appointed as the chairman of the Nomination Committee.

The roles and functions of the Nomination Committee include, among other things, reviewing the structure, size and composition of the Board at least once a year, making recommendations on any proposed changes to the Board to complement the Company’s corporate strategy, identifying individuals suitably qualified to become members of the Board and selecting, or making recommendations to the Board on the selection of individuals nominated for directorships, assessing the independence of the independent non-executive Directors and making recommendations to the Board on the appointment or re-appointment of the Directors and succession planning for Directors, in particular the chairman and the chief executive officer.

The Nomination Committee shall meet at least once a year. One meeting of the Nomination Committee was held during the Year. The attendance records of each member of the Nomination Committee at the said meeting are as follows:-

Name of the Directors	Attendance/
Number of
Nomination
Committee meetings

Executive Director

Mr. Chu King Tien (Chairman)	1/1

Independent non-executive Directors

Mr. Hui Kwok Wah	1/1

Mr. Ma Sai Yam	1/1


During the Year, the Nomination Committee has, among other things, reviewed the structure, size, composition and diversity of the Board, considered the appointment or re-appointment of the Directors, reviewed the independent non-executive Directors’ annual confirmation on independence and assessed their independence. The Nomination Committee will continue to review the necessity of more competent staff to join in for the expansion of the Group.

Pursuant to the amended Mandatory Disclosure Requirement L.(d)(ii) in the Corporate Governance Report as contained in Appendix 14 of the Listing Rules the Company should disclose its policy for nomination of directors in the summary of work performed by the Nomination Committee in its corporate governance report.

# Nomination Criteria

In evaluating and selecting any candidate for the directorship, the following criteria should be considered:

• character and integrity;

• qualifications including professional qualifications, skills, knowledge and experience, and diversity aspects under the Board Diversity Policy that are relevant to the Company’s business and corporate strategy;

• any measurable objectives adopted for achieving diversity on the Board;

• for independent non-executive Directors, whether the candidate would be considered independent with reference to the independence guidelines set out in the Listing Rules;

• any potential contributions the candidate can bring to the Board in terms of qualifications, skills, experience, independence and gender diversity;

• willingness and ability to devote adequate time to discharge duties as a member of the Board and/or Board committee(s) of the Company; and

• such other perspectives that are appropriate to the Company’s business and succession plan and where applicable may be adopted and/or amended by the Board and/or the Nomination Committee from time to time for nomination of directors and succession planning.

# Nomination Procedures

The Company has put in place the following Director nomination procedures:

# Appointment of New and Replacement Directors

(i) If the Board determines that an additional or replacement Director is required, it will deploy multiple channels for identifying suitable director candidates, including referral from Directors, shareholders, management, advisors of the Company and external executive search firms.

(ii) Upon compilation and interview of the list of potential candidates, the Nomination Committee will shortlist candidates for consideration by the Nomination Committee and/or the Board based on the selection criteria and such other factors that it considers appropriate. The Board has the final authority on determining suitable director candidate for appointment.


# 46. FINANCIAL INSTRUMENTS (continued)

# b. Financial risk management objectives and policies (continued)

# Credit risk and impairment assessment (continued)

The Group invests in rated and unrated debt securities as well as investment grade debt securities. The management regularly reviews and monitors the portfolio of debt securities. Summary of the fair value and principal amount of debt securities at FVTPL are set out below.

# Debt securities at FVTPL

	2021	2020

Fair value	Principal
amount	Fair value	Principal
amount

HK$’000	HK$’000	HK$’000	HK$’000

AA- to BBB-	166,806	163,726	422,637	455,245

BB+ to B	129,350	130,523	51,997	52,308

Unrated	89,139	87,291	242,602	242,602

	385,295	381,540	717,236	750,155


# 46. FINANCIAL INSTRUMENTS (continued)

# b. Financial risk management objectives and policies (continued)

# Credit risk and impairment assessment (continued)

# Trade debtors and contract assets arising from contracts with customers as well as lease receivables

In order to minimise the credit risk, the management of the Group has policies in place to ensure the sales of properties are made to purchasers with an appropriate financial strength and appropriate percentage of down payments. Monitoring procedures are in place to ensure that follow-up action is taken to recover overdue debts. In addition, the Group performs impairment assessment under ECL model on trade debtors including lease receivables individually or collectively based on the Group’s internet credit rating. Contract assets are assessed on an individual basis for impairment purpose.

# Loan receivables/amounts due from associates, joint ventures, a shareholder of a non-wholly owned subsidiary and an investee company/bank balances and deposits

The credit risk of loan receivables and amounts due from associates, joint ventures, a shareholder of non-wholly owned subsidiary and an investee company is managed through an internal process. The Group actively monitors the outstanding amounts owed by each debtor and uses past due information to assess whether credit risk has increased significantly since initial recognition. The directors of the Company consider that the probability of default is minimal after assessing the counter-parties financial background and underlying assets held by the related parties.

Loan receivables represent mortgage loans secured by the properties of the borrowers.

In determining the recoverability of loan receivables, the Group considers any change in the credit quality of the borrowers, the value of the underlying properties under mortgage, historical settlements of loan interests and other forward-looking information.

# Debt instruments at FVTOCI

The Group only invests in debt securities with credit rating of B or above issued by Moody’s or Standard & Poor’s. The directors of the Company focus on the investment diversification and their credit ratings changes. The directors of the Company assess ECL on the debt instruments at FVTOCI based on the default rates published by major international credit rating agencies that are applicable to the respective debts instruments credit grades. As a result of this assessment, the directors of the Company are of the opinion that the ECL on these debt instruments is insignificant.

Summary of the fair value and principal amount of debt securities at FVTOCI are set out below.

	2021	2020

Fair value	Principal
amount	Fair value	Principal
amount

HK$’000	HK$’000	HK$’000	HK$’000

AA- to BBB-	435,537	425,445	787,918	813,302

BB+ to B	1,259,538	1,274,442	647,113	906,070

Unrated	333,769	354,277	146,189	146,189

	2,028,844	2,054,164	1,581,220	1,865,561

The credit risks on pledged deposits, restricted bank deposits, deposit in a financial institution, bank balances and deposits are limited because the counterparties are banks/financial institutions with high credit ratings assigned by international credit-rating agencies.


# Key Corporate Bank summary of operations

As shown in Figure 13, Key Corporate Bank recorded net income attributable to Key of \$814 million for 2017, compared to\$628 million for 2016 and \$544 million for 2015. The 2017 increase was driven by an increase in revenue and lower provision for credit losses, but slightly offset by higher noninterest expense.

TE net interest income increased in 2017 compared to 2016. This increase is primarily due to growth in both loan and deposit balances. The balance increases are due to a full year impact of the First Niagara acquisition as well as growth in core businesses.

Noninterest income increased from 2016. The majority of the increase is related to growth in investment banking and debt placement fees, with growth in financial advisory, debt capital markets, and mortgage banking fees from our core Key franchise as well as the fourth quarter acquisition of Cain Brothers. Operating lease income and other leasing gains increased due to higher originations. Cards and payments income increased due to higher volumes in purchase and prepaid card and merchant services. Slightly offsetting these increases is a decline in other noninterest income mostly driven by impairments and lower gains related to certain investments held by the Real Estate Capital line of business.

The provision for credit losses decreased from 2016, primarily due to lower net loan chargeoffs and lower provisioning related to improving credit quality in the overall portfolio.

Noninterest expense increased from 2016. Personnel expense increased due to higher salaries, incentive compensation, benefits, and stockbased compensation expense partially related to the acquisition of Cain Brothers as well as higher performancebased compensation. Nonpersonnel expense increased due to higher operating lease expense, cards and payments processing, and other various expenses related to the acquisition of Cain Brothers.

In 2016, Key Corporate Bank’s net income attributable to Key increased from the prior year. TE net interest income increased compared to 2015, due to higher balances related to the First Niagara acquisition and growth in core businesses. Noninterest income increased due to growth in investment banking and debt placement fees, other noninterest income, and cards and payments income. The provision for credit losses increased primarily due to increased net loan chargeoffs. Noninterest expense increased due to higher salaries, incentive compensation, benefits, and stockbased compensation expense largely related to the acquisition of First Niagara as well as higher performancebased compensation, higher operating lease expense, cards and payments processing, FDIC assessment, and other various expenses related to the acquisition of First Niagara.

# Figure 13. Key Corporate Bank

Year ended December 31,	2017	2016	2015	Change 2017 vs. 2016

dollars in millions	Amount	Percent

SUMMARY OF OPERATIONS

Net interest income (TE)	$        1,190	$        1,049	$          886	$         141	13.4 %

Noninterest income	1,147	1,013	926	134	13.2

Total revenue (TE)	2,337	2,062	1,812	275	13.3

Provision for credit losses	20	127	83	(107)	(84.3)

Noninterest expense	1,257	1,131	988	126	11.1

Income (loss) before income taxes (TE)	1,060	804	741	256	31.8

Allocated income taxes and TE adjustments	246	178	196	68	38.2

Net income (loss)	814	626	545	188	30.0

Less: Net income (loss) attributable to noncontrolling interests	—	(2)	1	2	(100.0)

Net income (loss) attributable to Key	$         814	$          628	$         544	$          186	29.6 %

AVERAGE BALANCES

Loans and leases	$       37,732	$       31,929	$       25,865	$        5,803	18.2 %

Loans held for sale	1,242	934	937	308	33.0

Total assets	44,521	37,801	31,541	6,720	17.8

Deposits	21,318	20,783	19,043	535	2.6


# ADDITIONAL KEY CORPORATE BANK DATA

Year ended December 31,			Change 2017 vs. 2016

dollars in millions	2017	2016	2015	Amount	Percent

NONINTEREST INCOME

Trust and investment services income	$          138	$         143	$          137	$           (5)	(3.5)%

Investment banking and debt placement fees	589	471	439	118	25.1

Operating lease income and other leasing gains	80	56	62	24	42.9

Corporate services income	156	157	155	(1)	(.6)

Service charges on deposit accounts	50	50	43	—	—

Cards and payments income	40	29	15	11	37.9

Payments and services income	246	236	213	10	4.2

Mortgage servicing fees	61	53	48	8	15.1

Other noninterest income	33	54	27	(21)	(38.9)

Total noninterest income	$       1,147	$        1,013	$          926	$         134	13.2 %

# Other Segments

Other Segments consist of Corporate Treasury, our Principal Investing unit, and various exit portfolios. Other Segments generated net income attributable to Key of \$125 million for 2017, compared to \$89 million for 2016, and \$125 million for 2015.


# Revenue from major products

The following is an analysis of the Group’s revenue from its major products:

	Year ended 31 December	Six months ended
30 June

2007	2008	2009	2009	2010

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

			(unaudited)

Deanxit ....................	26,144	36,710	44,468	22,768	26,029

Ursofalk ....................	14,756	21,074	28,327	13,393	16,937

Augentrofpen Stulln Mono edye-rops . .	3,011	4,394	6,146	2,817	3,814

GanFuLe....................	2,599	3,910	4,780	2,243	2,004

XinHuoSu ...................	 —	2,839	7,253	2,983	5,697

Salofalk . . . . . . . . . . . . . . . . . . . .	 —	133	1,824	658	1,684

Cystistat . . . . . . . . . . . . . . . . . . . .	 —	66	515	171	319

Exacin ....................	—	—	—	—	3,367

Bioflor ....................	—	 —	 —	 —	282

Others .....................	5,237	3,474	3,141	1,742	1,062

Total ......................	51,747	72,600	96,454	46,775	61,195

# 6. OTHER GAINS AND LOSSES

	Year ended 31 December	 Six months ended 30 June

2007	2008	2009	2009	2010

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

			(unaudited)

Service fee income . . . . . . . . . . . . . .	 —	771	 —	 —	 —

Net exchange gain (loss) . . . . . . . . . .	655	743	(405)	(272)	(109)

Government subsidies (Note) . . . . . . .	1	623	801	161	240

Interest income . . . . . . . . . . . . . . . .	236	221	329	94	302

Gain on disposal of a subsidiary . . . . .	 —	 —	24	 —	 —

Loss on disposal of an associate
(Note 18) . . . . . . . . . . . . . . . . .	 —	 —	(70)	 —	 —

Fair value change on investments held
for trading . . . . . . . . . . . . . . . . .	288	158	81	14	81

Imputed interest income on
available-for-sale investment . . . . . .	30	20	 —	 —	 —

(Loss) gain on disposal of property,
lpant and equipment. . . . . . . . . . .	(8)	2	7	(2)	6

Impairment loss recognised on property,
lant and equipment (Note 14p) ....	 —	 —	(805)	 —	 —

Discount on acquisition of an associate
(Note 18) . . . . . . . . . . . . . . . . .	 —	 —	647	647	 —

Others . . . . . . . . . . . . . . . . . . . . .	78	152	53	49	26

	1,280	2,690	662	691	546

Note: The amount represents the incentive subsidies provided by the PRC local authorities to the Group to encourage performance of the research and development. There are no specific conditions attached to the grants, the Group recognised the grants upon receipts.


# 7. FINANCE COSTS

	Year ended 31 December	 Six months ended 30 June

2007	2008	2009	2009	2010

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

			(unaudited)

Interest on bank loans wholly repayable
within five years . . . . . . . . . . . . .	301	 —	43	 —	187

Imputed interest on deferred
consideration payables . . . . . . . . .	 —	226	347	191	149

	301	226	390	191	336

# 8. DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS

	Year ended 31 December	 Six months ended 30 June

2007	2008	2009	2009	2010

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

			(unaudited)

Directors’ fees . . . . . . . . . . . . . . . .	188	193	161	77	81

Other emoluments to non-executive
directors and independent
non-executive directors .........	—	—	—	—	—

Other emoluments to executive
directors

- basic salaries and allowances . . . .	308	328	340	173	151

- retirement benefits scheme
contributions . . . . . . . . . . . . .	17	12	15	4	8

	513	533	516	254	240


# OVERALL RESULTS

In 2018, the Company maintained a healthy growth in revenue from continuing operations and the revenue from the software business maintained a stable growth, which amounted to approximately RMB5,192.0 million, representing an increase of 7.6% as compared with last year, which was the greatest increase in the last three years. In particular, the data-driven operation services achieved a rapid growth, almost doubling that of last year.

The adjusted net profit for 2018 amounted to approximately RMB602.2 million, representing a significant increase of 29.9% as compared with last year, and the adjusted net profit margin was 11.6%, achieving a good profitability level. The use of adjusted net profit from continuing operations is to easily compare the operating performance of the Company between periods. In view of this, we have eliminated the impacts of certain non-recurring, non-cash or non-operating items. Such impacts include share-based compensation, amortization of intangible assets arising from acquisition, interest expenses from the Privatization Syndicated Loan1, exchange gain and loss, and the listing expenses. The adjusted net profit and adjusted net profit margin referred to in this annual report were adjusted pursuant to the principles as set out above.

Net cash generated from operating activities amounted to approximately RMB583.3 million, representing an increase of 14.3% as compared with last year, and the cash generating ability continued to strengthen.

# BUSINESS REVIEW

# Further reinforcing our leading position in the telecom operators market to maintain positive growth

We served as the provider of China’s first-generation telecom software and services, and accumulated experience of more than 20 years in the telecom operators market. With leading research and development (“R&D”) capabilities, products and services within the industry, we have collaborated extensively with the three major telecom operators in the PRC, supporting over one billion subscribers nationwide. We maintained an absolute leading position in the industry.

In 2018, the Company continued to expand its input on business support, 5G intelligent network, data-driven operating services, big data and artificial intelligence (“AI”), developing over 500 types of software products for telecom operators. We actively participated in the centralized reform of telecom operators, supporting the R&D of various large-scale information technology (“IT”) projects. We took the initiative to grasp development opportunities provided by newly established specialized companies and participated in early business model design phase to provide a variety of software products and services. We actively explored the development opportunities of telecom operators in new business sectors such as IoT, data-driven operation, intelligent customer services and 5G intelligent network, and continuously develop the telecom operators market. As of December 31, 2018, the Company provided services to 214 telecom operator customers, representing an increase of 10.9% as compared with last year, and achieved a customer retention rate of over 99%.

REVENUE FROM THE SOFTWARE BUSINESS

ADJUSTED NET PROFIT

NET CASH GENERATED FROM OPERATING ACTIVITIES

Note 1: Refers to the loan borrowed in connection with the delisting of AsiaInfo Holdings, LLC (“AsiaInfo Holdings”) from National Association of Securities Dealers Automated Quotations (“NASDAQ”) Global Market of the United States, which was transferred to our Group in December 2015 and refinanced in 2018.


# Actively deploying large enterprise customer market in non-telecom industries, and achieving breakthroughs in expansion of customers

With in-depth knowledge and understanding on the telecom operators market, precious skills and techniques in project management, and rich telecom grade software products, we are actively enhancing market shares in the non-telecom large enterprise customers market, providing support services to large enterprises on business transformation and data-driven operating services.

During the Reporting Period, the Company had put its focus on related industries such as postal, cable TV, banking, insurance, power grid and automobile and collaborated with large enterprises in the industry and made phenomenal progress, such as, the success in launching the CRM system for China Post online, obtaining the order of CRM system for China Life Property and Casualty Insurance Company Limited and PICC Life Insurance Company Limited, as well as entering the power grid industry to become the strategic partner of State Grid Limited (“State Grid”) and its subsidiaries. As of December 31, 2018, the Company provided services to 38 non-telecom large enterprise customers, representing an increase of 35.7% as compared with last year, and achieved a customer retention rate of over 99%.

# Rapid growth in data-driven operation business convening power for future growth

In light of the current wave of development in digitalization and informationization, customers from different sectors have pressing needs for digital transformation. The Company leveraged its strong data analyzing capability, professional modeling and IT capabilities, as well as in-depth understanding on operating environment and pain points of customers’ business, to help corporations analyze market development and customer trends by providing them with software as a service (“SaaS”) data-driven operation service tools through external data sources from multiple channels, achieving a win-win situation.

During the Reporting Period, the Company strived to cultivate the new business area of data-driven operating services. We provided major customers including operators, banking, insurance, automobile and public utility related industries with innovative data-driven operating services. And we actively expanded customer base and income sources with measures such as jointly establishing innovative laboratories on data-driven business with headquarters and subsidiaries of various telecom operators, establishing strategic partnership with China Merchants Bank, providing public utility operators with data-driven operating platform for population statistic management and safety control of dense crowd, etc. In 2018, data-driven operating services achieved a revenue of approximately RMB82.5 million with a nearly 100% increase, demonstrating our rapid business development and promising prospect.

# Actively deploying IoT applications in vertical industries

Facing industry changes and development opportunities in the smart connection generation, the Company has reinforced its efforts in exploring and developing IoT sector and has established an innovative “IoT platform + IoT business application + IoT operation” business model.

In terms of smart communities and the Internet of Vehicles, we have developed mature applications for industries, providing IoT services. We also started our in-depth collaboration with well-known enterprises in real estates, properties and automobile industries, such as Beijing North Star Group, Kang Qiao Service, Desay SV, BYD Company Limited and Changan Automobile. As of December 31, 2018, the smart community platform products covered over 3 million users, activating over 200 communities. The Internet of Vehicles served over 6 million members of Changan Automobile and over 0.3 million high-end users of BYD Company Limited.


# 29. STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY

# (a) Statement of financial position of the Company

		As at 31 December

2018	2017

	Note	HK$’000	HK$’000

ASSETS

Non-current assets

Investments in subsidiaries		2	25,196

Total non-current assets		2	25,196

Current assets

Trade and other receivables		1,458	1,708

Amounts due from subsidiaries		17,769	211,387

Bank and cash balances		82	319

Total current assets		19,309	213,414

TOTAL ASSETS		19,311	238,610

EQUITY AND LIABILITIES

Share capital	28	174,490	161,152

Reserves	29(b)	(166,895)	70,117

Total equity		7,595	231,269

LIABILITIES

Current liabilities

Amounts due to subsidiaries		8,657	437

Other payables and accruals		3,059	6,904

Total current liabilities		11,716	7,341

TOTAL EQUITY AND LIABILITIES		19,311	238,610

Approved by the Board of Directors on 29 March 2019 and is signed on its behalf by:

Zheng Jinwei	He Qian


# 29. STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY (Continued)

# (b) Reserve movement of the Company

	Share
premium	Share-based
payments
reserve	Convertible
bonds reserve	Contributed
surplus	Accumulated
losses	Total

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

At 1 January 2017	7,117,171	56,277	5,139	332,310	(7,395,273)	115,624

Loss for the year	—	—	—	—	(82,259)	(82,259)

Issue of shares by subscription
(note 28(b))	36,448	—	—	—	—	36,448

Redemption of convertible bonds	—	—	(5,139)	—	5,139	—

Share-based payments	—	304	—	—	—	304

Transfer of reserve upon lapse of
share options	—	(47,500)	—	—	47,500	—

At 31 December 2017	7,153,619	9,081	—	332,310	(7,424,893)	70,117

Adjustments on initial application of
— HKFRS 9	—	—	—	—	(203,603)	(203,603)

Restated balance at
1 January 2018	7,153,619	9,081	—	332,310	(7,628,496)	(133,486)

Loss for the year	—	—	—	—	(37,891)	(37,891)

Share-based payments	—	4,482	—	—	—	4,482

Issue of shares on share option
scheme	4,482	(4,482)	—	—	—	—

Transfer of reserve upon lapse of
share options	—	(9,081)	—	—	9,081	—

At 31 December 2018	7,158,101	—	—	332,310	(7,657,306)	(166,895)


# 1. Basis of Presentation

The Consolidated Financial Statements reflect the consolidated operations of TE Connectivity Ltd. and its subsidiaries and have been prepared in United States (‘‘U.S.’’) dollars in accordance with accounting principles generally accepted in the U.S. (‘‘GAAP’’).

# Description of the Business

TE Connectivity Ltd. (‘‘TE Connectivity’’ or the ‘‘Company,’’ which may be referred to as ‘‘we,’’ ‘‘us,’’ or ‘‘our’’) is a global technology and manufacturing leader creating a safer, sustainable, productive, and connected future. For more than 75 years, our connectivity and sensor solutions, proven in the harshest environments, have enabled advancements in transportation, industrial applications, medical technology, energy, data communications, and the home.

We operate through three reportable segments:

• Transportation Solutions. The Transportation Solutions segment is a leader in connectivity and sensor technologies. Our products, which must withstand harsh conditions, are used in the automotive, commercial transportation, and sensors markets.

• Industrial Solutions. The Industrial Solutions segment is a leading supplier of products that connect and distribute power, data, and signals. Our products are used in the industrial equipment; aerospace, defense, oil, and gas; and energy markets.

• Communications Solutions. The Communications Solutions segment is a leading supplier of electronic components for the data and devices and the appliances markets. We are also a leader in developing, manufacturing, installing, and maintaining some of the world’s most advanced subsea fiber optic communications systems.

# Use of Estimates

The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Significant estimates in these Consolidated Financial Statements include restructuring and other charges, assets acquired and liabilities assumed in acquisitions, allowances for doubtful accounts receivable, estimates of future cash flows and discount rates associated with asset impairments, useful lives for depreciation and amortization, loss contingencies, net realizable value of inventories, estimated contract revenue and related costs, legal contingencies, tax reserves and deferred tax asset valuation allowances, and the determination of discount and other rate assumptions for pension benefit cost. Actual results could differ materially from these estimates.

# Fiscal Year

We have a 52- or 53-week fiscal year that ends on the last Friday of September. For fiscal years in which there are 53 weeks, the fourth quarter reporting period includes 14 weeks. Fiscal 2017, 2016, and 2015 ended on September 29, 2017, September 30, 2016, and September 25, 2015, respectively. Fiscal 2017 and 2015 were 52 weeks in length. Fiscal 2016 was a 53-week year.


# 2. Summary of Significant Accounting Policies

# Principles of Consolidation

We consolidate entities in which we own or control more than 50% of the voting shares or otherwise have the ability to control through similar rights. All intercompany transactions have been eliminated. The results of companies acquired or disposed of are included on the Consolidated Financial Statements from the effective date of acquisition or up to the date of disposal.

# Revenue Recognition

Our revenues are generated principally from the sale of our products. Revenue from the sale of products is recognized at the time title and the risks and rewards of ownership pass to the customer. This generally occurs when the products reach the shipping point, the sales price is fixed and determinable, and collection is reasonably assured.

Contract revenues for construction related projects, which are generated in the Communications Solutions segment, are recorded primarily using the percentage-of-completion method. Profits recognized on contracts in process are based upon estimated contract revenue and related cost to complete. Percentage-of-completion is measured based on the ratio of actual costs incurred to total estimated costs. Revisions in cost estimates as contracts progress have the effect of increasing or decreasing profits in the current period. Provisions for anticipated losses are made in the period in which they first become determinable. In addition, provisions for credit losses related to unbilled receivables on construction related projects are recorded as reductions of revenue in the period in which they first become determinable.

We generally warrant that our products will conform to our, or mutually agreed to, specifications and that our products will be free from material defects in materials and workmanship for a limited time. We limit our warranty to the replacement or repair of defective parts, or a refund or credit of the price of the defective product. We accept returned goods only when the customer makes a verified claim and we have authorized the return. Generally, a reserve for estimated returns is established at the time of sale based on historical return experience and is recorded as a reduction of sales.

Additionally, certain of our long-term contracts in the Communications Solutions segment have warranty obligations. Estimated warranty costs for each contract are determined based on the contract terms and technology-specific considerations. These costs are included in total estimated contract costs and are accrued over the construction period of the respective contracts under percentage-of-completion accounting.

We provide certain distributors with an inventory allowance for returns or scrap equal to a percentage of qualified purchases. A reserve for estimated returns and scrap allowances is established at the time of the sale based on an agreed-upon, fixed percentage of sales to distributors and is recorded as a reduction of sales.

Other allowances include customer quantity and price discrepancies. A reserve for other allowances is generally established at the time of sale based on historical experience and is recorded as a reduction of sales. We believe we can reasonably and reliably estimate the amounts of future allowances.


# CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

for the six months ended 30 September 2020 — unaudited

(Expressed in Hong Kong dollars)

	Six months ended
30 September

2020	2019

$’000	$’000

(Loss)/profit for the period	(7,029)	18,425

Other comprehensive income for the period

Item that may be reclassified subsequently to
profit or loss:

Exchange difference on translation of the financial
statements of subsidiaries (nil tax effect)	7,554	(13,908)

Total comprehensive income for the period	525	4,517


# CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 30 September 2020 — unaudited

(Expressed in Hong Kong dollars)

	Note	At
30 September
2020	At
31 March
2020

$’000	$’000

Non-current assets

Property, lipant and equpment	9	8,342	17,824

Intanilgbe assets	10	48,662	50,261

Goodwill	10	55,389	60,432

Deferred tax assets		2,307	2,097

		114,700	130,614

Current assets

Inventories		747	927

Trade and other receivables	11	100,726	92,332

Current tax recoverable		3,265	—

Restricted bank deposits		2,878	2,586

Cash at bank and in hand		190,689	206,735

		298,305	302,580

Current liabilities

Trade and other payables	12	117,484	100,687

Contract liabilities		47,897	45,349

Amount due to the controlling shareholder		3,459	2,435

Lease liabilities		12,557	21,054

Current tax payable		6,393	8,239

		187,790	177,764

Net current assets		110,515	124,816

Total assets less current liabilities		225,215	255,430


# Noble Energy, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(millions)

	Year Ended December 31,

2017	2016	2015

Net Loss Including Noncontrolling Interests	$        (1,050)	$          (985)	$        (2,441)

Other Items of Comprehensive Loss

Net Change in Mutual Fund Investment	—	—	(11)

Less Tax Expense	—	—	4

Net Change in Pension and Other	3	3	99

Less Tax Benefit	(1)	(1)	(35)

Other Comprehensive Income	2	2	57

Comprehensive Loss Including Noncontrolling Interests	$        (1,048)	$          (983)	$        (2,384)

Less: Comprehensive Income Attributable to Noncontrolling Interests	68	13	—

Comprehensive Loss Attributable to Noble Energy	$         (1,116)	$          (996)	$        (2,384)

The accompanying notes are an integral part of these financial statements.


Noble Energy, Inc.

Consolidated Balance Sheets

(millions)

	December 31,
2017	December 31,
2016

ASSETS

Current Assets

Cash and Cash Equivalents	$           675	$         1,180

Accounts Receivable, Net	748	615

Other Current Assets	780	160

Total Current Assets	2,203	1,955

Property, Plant and Equipment

Oil and Gas Properties (Successful Efforts Method of Accounting)	29,678	30,355

Property, Plant and Equipment, Other	879	909

Total Property, Plant and Equipment, Gross	30,557	31,264

Accumulated Delpreciation, DedApetion an mortization	(13,055)	(12,716)

Total Property, Plant and Equipment, Net	17,502	18,548

Goodwill	1,310	—

Other Noncurrent Assets	461	508

Total Assets	$        21,476	$        21,011

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities

Accounts Payable  Trade	$          1,161	$           736

Other Current Liabilities	578	742

Total Current Liabilities	1,739	1,478

LongTerm Debt	6,746	7,011

Net Deferred Income Tax Liability	1,127	1,819

Other Noncurrent Liabilities	1,245	1,103

Total Liabilities	10,857	11,411

Shareholders’ Equity

Preferred Stock  Par Value $1.00 per share; 4 Million Shares Authorized, None Issued	—	—

Common Stock  Par Value $0.01; 1 Billion Shares Authorized; 529 Million and 471 Million
Shares Issued, Respectively	5	5

Additional Paid in Cailpta	8,438	6,450

Accumulated Other Comprehensive Loss	(30)	(31)

Treasury Stock, at Cost; 39 Million and 38 Million Shares, Respectively	(725)	(692)

Retained Earnings	2,248	3,556

Noble Energy Share of Equity	9,936	9,288

Noncontrolling Interests	683	312

Total Equity	10,619	9,600

Total Liabilities and Equity	$        21,476	$        21,011

The accompanying notes are an integral part of these financial statements.


# Statements of Changes in Equity

Year ended 31 December 2016

Company	Share
capital	Merger/
capital
reserve	Share-based
payments
reserve	Hedging
reserve	Retained
profits	Total
reserves	Total
equity

$m	$m	$m	$m	$m	$m	$m

At 1 January 2015	282.6	276.5	13.4	(1.4)	823.2	1,111.7	1,394.3

Total comprehensive income for the year

Profit for the year	–	–	–	–	514.9	514.9	514.9

Other comprehensive income

Effective portion of changes in fair value
of cash flow hedges, net of taxation	–	–	–	1.9	–	1.9	1.9

Total comprehensive income for the year	–	–	–	1.9	514.9	516.8	516.8

Transactions with equity holders of the Company,
recognised directly in equity

Contributions by and distributions to equity holders
of the Company

Issue of shares pursuant to share plans	10.9	–	(10.6)	–	–	(10.6)	0.3

Share-based payment expenses	–	–	9.5	–	–	9.5	9.5

Dividends paid (Note 29)	–	–	–	–	(345.9)	(345.9)	(345.9)

Total transactions with equity holders of the Company	10.9	–	(1.1)	–	(345.9)	(347.0)	(336.1)

At 31 December 2015	293.5	276.5	12.3	0.5	992.2	1,281.5	1,575.0


Financials

Company	Share
capital	Treasury
shares	Merger/
capital
reserve	Share-based
payments
reserve	Fair value
reserve	Hedging
reserve	Retained
profits	Total
reserves	Total
equity

$m	$m	$m	$m	$m	$m	$m	$m	$m

At 1 January 2016	293.5	–	276.5	12.3	–	0.5	992.2	1,281.5	1,575.0

Total comprehensive income for the year
Profit for the year	–	–	–	–	–	–	497.1	497.1	497.1

Other comprehensive income

Net change in fair value of
available-for-sale financial assets	–	–	–	–	12.5	–	–	12.5	12.5

Effective portion of changes in fair value
of cash flow hedges, net of taxation	–	–	–	–	–	(0.5)	–	(0.5)	(0.5)

Total comprehensive income
for the year	–	–	–	–	12.5	(0.5)	497.1	509.1	509.1

Transactions with equity holders of the
Company, recognised directly
in equity

Contributions by and distributions
to equity holders of the Company

Treasury shares purchased by the Company	–	(12.3)	–	–	–	–	–	(12.3)	(12.3)

Issue of shares pursuant to share plans	6.2	–	–	(6.2)	–	–	–	(6.2)	–

Share-based payment expenses	–	–	–	7.2	–	–	–	7.2	7.2

Tax impact on transfer of treasury shares	–	–	–	0.8	–	–	–	0.8	0.8

Dividends paid (Note 29)	–	–	–	–	–	–	(346.2)	(346.2)	(346.2)

Total transactions with equity holders
of the Company	6.2	(12.3)	–	1.8	–	–	(346.2)	(356.7)	(350.5)

At 31 December 2016	299.7	(12.3)	276.5	14.1	12.5	–	1,143.1	1,433.9	1,733.6


# 21 AVAILABLE-FOR-SALE INVESTMENTS

	2017	2016

HK$’000	HK$’000

Listed equity securities, at fair value	61,501	51,408

Unlisted equity securities, at fair value (note)	5,282,793	4,804,782

	5,344,294	4,856,190

Note: In 2016, the Group acquired an indirect equity interest of approximately 24.4% in Shanghai Krupp Stainless Co. Ltd. (“SKS”), which owns a project site in Pudong New Area, Shanghai (the “Project”). As the Group does not have any significant influence over financial and operating policies to Shanghai Krupp, the Group recorded its investments as available-for-sale investments. The investment cost in SKS amounting to HK\$3,425 million as at 31 December 2017 was included in the balance of unlisted equity securities.

The Group’s investment was made based on a public notice issued and approved in May 2016 by the Municipal Government on city planning regarding the conversion of the land usage from industrial to commercial and residential use. However, in August 2017, the Municipal Government issued and approved another development plan of Pudong Expo Cultural Park of which the underlying Project held by SKS fell within the area of park development.

As of the date of this report, there is no verbal or written notice issued by the government to SKS regarding the development of the site area and the rationale of the change in the development plan of the area and its implication to the original development plan of the Project. As of the date of this report, SKS remains as the registered owner of the land with all the rights conferred as per the original land grant.

Based on the above-mentioned situation and after taking into consideration the legal advice from an independent legal counsel, together with the current status of the project site, management considered SKS maintains reasonable grounds to negotiate with the Municipal Government in respect of the latest development plan of the Project including but not limited to explore a mutually acceptable solution and/or to pursue a negotiation for its damages and loss of profits, if any. Management has then engaged independent valuers, Cushman & Wakefield Limited, who hold a recognised relevant professional qualification, to estimate the fair value of the Group’s available-for-sale investments as at 31 December 2017 based on the original development plan of the Project as set out in the public notice issued in May 2016.

Cushman & Wakefield Limited adopted an asset-based valuation approach on the investment, which is a means of estimating the value of a business using methods based on the market value of individual business assets less liabilities and judgement was required to determine the fair value.


# 22 MORTGAGE LOANS RECEIVABLE

	2017	2016

HK$’000	HK$’000

Non-current mortgage loans receivable	3,641,905	1,001,386

Current portion of mortgage loans receivable	30,025	13,663

Total mortgage loans receivable	3,671,930	1,015,049

The balance included first mortgage loans of HK\$2,442,536,000 (2016: HK\$611,329,000) offered to buyers of certain properties developed by the Group in Hong Kong. For these first mortgage loans receivable, the fair value was calculated based on cash flows discounted using lending rates from financial institutions and assuming the loans will be repaid according to the contract terms. The valuation process of the Group is set out in note 3(c)(iv) to the consolidated financial statements.

The remaining amounts mostly represented the second mortgage loans receivable which are carried at amortised cost.

Mortgage loans receivable are denominated in Hong Kong dollars.

# 23 ACCOUNTS RECEIVABLE, PREPAYMENTS AND DEPOSITS

	2017	2016

HK$’000	HK$’000

Trade receivables (note (a))	4,332,017	347,788

Prepayments	223,230	928,753

Land bidding deposit (note (b))	–	168,652

Others	3,010,964	1,033,423

	7,566,211	2,478,616

The carrying amounts of accounts receivable approximate their fair value.

The carrying amounts of the Group’s accounts receivable, prepayments and deposits are denominated in the following currencies:

	2017	2016

HK$’000	HK$’000

Hong Kong dollar	6,957,831	1,831,154

Renminbi	507,694	646,858

Other currencies	100,686	604

	7,566,211	2,478,616


The Dongguan Public Security Fire Bureau Zhangmutou Brigade\* (東莞市公安消防局樟木頭大隊) conducted an investigation into this incident and issued a report on 7 September 2017 (the “Report”). The Report stated that the fire was caused by short circuit in the storage area of finished products, which ignited sparks and caused fire to the inflammable products nearby. The estimated loss on finished goods was HK\$14.9 million, which was covered by our insurance policies. Based on our inventory system which enables us to track the movement and location of our inventory, we were able to estimate the value of the inventory stored in the relevant warehouse. We also conducted stock take on our other warehouse in Dongguan Factory, and compared the value of such inventory against our record on overall inventory, in order to ensure the accuracy of the estimated loss on finished goods. Except for an administrative penalty amounting to RMB30,000 imposed on Dongguan Zensee, no criminal liability and/or other administrative penalty was imposed on any member of our Group or any of its directors. After the incident, we enhanced our fire prevention equipment in our factory buildings, including but not limited to installing sprinklers, fire-proof doors, fire hydrant boxes, fire hydrants and smoke ventilation systems. In addition, we engaged a qualified fire safety system company, which is an Independent Third Party, to conduct site visit and review our facilities in order to identify areas of high risk of fire. We also installed a smoke detection system which allows remote monitoring of the relevant facilities.

Our PRC Legal Advisers are of the opinion that, according to the written confirmations provided by the relevant competent fire protection authorities of PRC and/or public online search on the relevant websites of PRC fire protection bureaus, during the Track Record Period, saved for the above disclosed, no administrative penalties have been found to be imposed on us for the violation of relevant fire protection laws and regulations.

Our Directors confirm that there were no incident that resulted in death or serious injury of our employees during the Track Record Period. Although we have maintained insurance policy relating to our production facilities and the safety of our employees working in our production plants, there is no assurance that our insurance policies will be adequate to cover all losses incurred in the event of an incident or other unexpected event in the future. In such event, if the coverage of our existing insurance policies is not adequate, our financial condition and results of operations may be materially adversely affected. For the associated risks, see “Risk Factors – Risks relating to our business – Our insurance coverage may not be adequate.”.

# INFORMATION TECHNOLOGY

We rely on our integrated IT systems to support the important aspects of our business. As at the Latest Practicable Date, we had two sets of information systems in place, namely MES and the MRP System, which were developed by ourselves.

Our MRP System and MES support the daily operations of our Group by gathering data related to order processing, engineering, procurement, material and production planning, production, quality control, delivery, inventories and finance. The systems also enable us to monitor the operational processes and order status real time, which allow transparency and facilitate management of our operation.


Our MRP System regulates our supply chain and financial management, collects and combines data in relation to procurement of raw materials, production, product delivery and inventories. Our MES supports production and materials tracking which allows us to trace the use of raw materials in production and check the production status of each purchase order we receive. All of the operational information can be monitored in real time and updated through our MRP System and MES, which allow transparency and control of our production processes. These systems are managed by our information technology team, which comprised 49 staff as at the Latest Practicable Date.

Q P (SZ) is responsible for supporting our websites, including the development of our websites and online personalisation and design features, online ordering management and automatic imposition processes for digital printing. Linking up online ordering and manufacturing management, the websites feature online personalisation and ordering functions and enable automatic imposition processes for digital printing. The websites are integrated with our MRP System so that the online orders are processed with minimal human effort.

In 2019, Q P Printing was awarded the Certificate of Industry 4.0 Maturity Recognition for achieving a maturity level 1i Real Time Information Generation (equivalent to a Maturity Level 3 of the acatech Industry 4.0 Maturity Model) for its achievement in having real-time information in the digital production shop floor for playing card business including web to print operation, production processes including cutting, priming, digital printing, coating and kitting.

During the Track Record Period and up to the Latest Practicable Date, we had not experienced any material malfunction of our IT systems.

As part of our business strategies, we intend to leverage our technological capabilities and upgrade our IT infrastructure. For details, see “– Our business strategies – Leverage our technological capability to capture more business opportunities in Internet retailing and upgrade our IT infrastructure” and “Future Plans and Use of Proceeds”.


Measure”), approximately 66.1% and 77.1% of our revenue derived from the U.S. by destination of delivery will be produced by our subcontractors in Vietnam. We also expect to incur additional costs for subcontracting further production to Vietnam of approximately HK\$4.4 million and HK\$5.1 million in the first year and second year, respectively, upon the implementation of Contingency Measure.

Based on the assumptions that our Group’s revenue derived from the U.S. by destination of delivery by FY2020 upon full implementation of Immediate Measures and in each of the first and second year upon activation of Contingency Measure would be the same as our revenue derived from the U.S. by destination of delivery in FY2018 (“U.S. FY2018 Revenue”), we expect to achieve revenue equal to the full amount of the U.S. FY2018 Revenue without being subject to the U.S. tariffs by the second year of fully implementing the Contingency Measure. The table below sets out the breakdown of the estimated percentage of the U.S. FY2018 Revenue to be achieved under each relevant Immediate Measure and/or Contingency Measure and remain to be subject to the U.S. tariffs upon implementation of such measures.

	U.S. FY2018 Revenue to be achieved

By FY2020
upon full
imlipementaton
of Immediate
(NtMoe)easures	By first year
upon full
imlpementation
of Contingency
Measure	By second year
upon full
imlpementation
of Contingency
Measure

%	%	%

1. Immediate Measure 1A
and/or Contingency Measure
– enigagng and further
expanding the engagement of
subcontractors in Vietnam	55.9	66.1	77.1

2. Immediate Measure 1B –
enbgaigng sucontractor in
Hong Kong	15.3	15.3	15.3

3. Immediate Measure 2 –
alifppyng or
De Minimis value exemption
for web sales customers
based in the U.S.	7.5	7.5	7.5

4. Revenue generated from our
laboratory testing services
which are not subject to the
U.S. tariffs	0.1	0.1	0.1

5. Revenue remaining to be
subject to the U.S. tariffs	21.2	11.0	 Nil

Total	100.0	100.0	100.0

---

Note: The table aims to show the estimated percentage of U.S. FY2018 Revenue to be achieved by FY2020. As such, the effect of Immediate Measures other than Immediate Measures 1A, 1B and 2 are not taken into account.


We will further negotiate with our customers to further take up the increased U.S. tariffs payable by our customers during the two-year transition period on a case-by-case basis. The following sensitivity analysis illustrates, based on the U.S. FY2018 Revenue, the impact on our revenue and net profit for FY2020 upon full implementation of the Immediate Measures and for the first year and second year upon implementation of the Contingency Measure assuming the Section 301 List 4 Additional Tariff of 25% is imposed and our Group was to bear all such U.S. tariffs:

	FY2020
following
imlpementation
of Immediate
Measures	First year
following
imlipementaton
of Contingency
Measure	Second year
following
imlipementaton
of Contingency
Measure

HK$’000	 HK$’000	 HK$’000

Decrease in revenue	42,672	11,285	3,023

Decrease in net profit	35,999	9,523	2,551

In light of the Contingency Measure our Group have in place, our Directors believe that we will continue to be able to maintain our customer relationships and our business operation and financial performance will not be materially affected by the potential increase of the Section 301 List 4 Additional Tariff to 25% in the imminent future. Our Directors confirm that the implementation costs of the Contingency Measure would be funded by our internal resources and/or bank loan(s). Our Directors undertake that our Group will implement the Contingency Measure in parallel with the Immediate Measures as listed in the above if the Section 301 List 4 Additional Tariff is increased from 15% to 25% or above anytime in the future. In the event that the Contingency Measure has to be activated in the future, our Directors will continue to closely monitor the market and economic environment as well as our business and financial conditions to ensure any material adverse effect on our Group’s business and operations will be minimised as a whole. Our Directors also undertake to keep reviewing the relevant laws and regulations in relation to the U.S. tariffs and will seek legal advice as and when appropriate.

# Relocation of sales upon full implementation of Immediate Measures 1A, 1B and 2 and Contingency Measure to shift our production outside the PRC

We expect that by the end of FY2020, our Group will be able to fully implement Immediate Measures 1A, 1B and 2. The following tables set out the breakdown of revenue and sales volume attributable to our U.S. sales products by production channels in different geographical locations (i) during the Track Record Period; and (ii) upon full implementation of Immediate Measures 1A, 1B and 2 and Contingency Measures (in terms of our sales amount and sales volume attributable to our U.S. sales products by production channels in different geographical locations for FY2018):


# EVENTS AFTER THE REPORTING PERIOD

# Back-to-back Guarantee Agreement

Reference were made to the announcements of the Company dated 30 July 2018, 29 July 2019, 24 July 2020 and 28 July 2021 in relation to the provisional of financial guarantee services. A Renewal Agreement to renew the Back-to-back Guarantee Agreement was entered by Wuhu Feishang Non-metal Material Co., Limited\*（蕪湖飛尚非金屬材料有限公司）, a wholly-owned subsidiary of the Company established in the PRC (the “Wuhu Subsidiary”), pursuant to which the Wuhu Subsidiary has agreed to provide financial guarantee to the Borrower by means of pledging its deposit in the sum of CNY20 million for procuring the Borrower to obtain the loan of CNY19 million provided by the lending bank. In return, the Wuhu Subsidiary shall receive a guarantee fee of 6% of the amount of deposit pledged by the Wuhu Subsidiary. The Board considers that the Group has surplus cash in CNY in excess of the working capital needs for its business operation in the PRC. The provision of Guarantee in favour of the Borrower will better utilize the Group’s surplus cash with reasonable return.

# Proposed (i) share consolidation; and (ii) rights issue

The Company proposed to implement (i) the share consolidation on the basis that every ten (10) issued and unissued existing shares into one (1) consolidated share (“Consolidated Share(s)”) and (ii) the rights issue on the basis of one (1) rights shares for every one (1) Consolidated Shares held on the record date at the subscription price of HK\$0.350 per rights share, to raise gross proceeds of approximately HK\$27.8 million before expenses (assuming no other change in the number of Shares in issue save for the share consolidation on or before the record Date) by issuing 79,557,200 rights shares. Details were set out in the Company’s announcements dated 16 July 2021 and 6 August 2021.

As save as above, there is no material event undertaken by the Company or the Group subsequent to 30 June 2021 and up to the date of this report.


# OUTLOOK

The PRC has generally kept COVID-19 under control, and economic activities and confidence have rapidly recovered. The Chinese government has implemented strong fiscal and monetary stabilizing policies to further boost the PRC ‘s GDP growth by building a strong domestic market and supporting the domestic and international “dual circulation” strategy. Investment in fixed assets, real estate and infrastructure construction is expected to maintain solid growth, which will then support bentonite demand from downstream industries including the iron and steel and the energy sectors. Nevertheless, it would be difficult to gauge the longer term impact of such events as the situation is dynamically revolving. The Group has been proactive in closely monitoring the market conditions and taking appropriate measures to respond to the challenges. The Group will also continue to strengthen its cost control and resources management as well as to actively participate in project tenders, in order to maintain its competitiveness in the market.

Within the bentonite industry, uncertainties due to COVID-19 and international trade conflicts will cause market competition to further intensify and prices to fluctuate. Meanwhile, the new series of real estate market regulation and control policies and the PRC ‘s ambitious target to achieve carbon neutrality by 2060 are expected to adversely affect the iron and steel and the traditional energy industries in the long term, which will negatively impact the Group’s business by imposing pressures on demand for pelletising clay and drilling mud. The Group strives to maintain the sales volume of its bentonite products by improving product quality and adhering to the “selling more with lower margin” strategy, and yet the Group may not be able to maintain the current level of gross profit margin in the coming months. The Group intends to continue expanding its customer base and market share by boosting product awareness of its bentonite products, refining its production technology and developing new products with a view to enhance the Group’s overall competitiveness to cope with the risks and uncertainties of the business environment.

In view of the COVID-19 pandemic situation in Hong Kong, the Group expects that the business environment in financial services, including wealth management and money lending business, would be challenging in the year 2021. However, with the expectation of increasing awareness in wealth management in recent years, as well as the probable easing of travel restrictions between Hong Kong and the PRC, the Group remains cautiously optimistic in the medium and long-term development of this business segment in Hong Kong. Meanwhile, the Group will cautiously monitor market change and impose robust control measures to improve cost efficiency and risk management in order to provide a solid foundation for sustainable growth in the future.


the preceding assignment should behave properly when compiled with any standard C compiler. If you declare d as some other integer type, such as

the assignment might provoke a warning from the compiler, or worse, silently truncate the assigned value at runtime, for example, if ptrdiff\_t were an alias for long long int for that implementation.

The lower and upper limits of ptrdiff\_t are defined by PTRDIFF\_MIN and PTRDIFF\_MAX respectively. The minimum acceptable limits defined by the C Standard are

These limits require that any 16-bit implementation must have at least a 17-bit ptrdiff\_t to represent all possible differences of 16-bit pointers.

Although the standard does not explicitly guarantee that sizeof(ptrdiff\_t) equals sizeof(size\_t), it typically is the case on 32-bit or 64-bit implementa-tions. This may seem somewhat surprising because a signed integer type may not be able to represent the difference between two pointers on such a system.

For example, on a system that supports objects up to \( 2 ^ { 3 2 } \mathrm { ~ - ~ } \) 1 bytes, the sizeof operator can yield values only from 0 to \( 2 ^ { 3 2 } - 1 \), so 32 bits are sufficient. However, pointer subtraction for pointers to elements of an array of \( 2 ^ { 3 2 } \mathrm { ~ - ~ } 1 \) bytes could yield values from −(232 − 1) to +(232 − 1). Consequently, ptrdiff\_t would have to be at least 33 bits to represent all possible differences. How-ever, C allows an implementation in which ptrdiff\_t is 32 bits by making it undefined behavior if the result of subtracting two pointers is not represent-able in an object of type ptrdiff\_t. In most cases, a ptrdiff\_t overflow on a two’s complement machine with quiet wraparound on overflow does not affect the result of the operation. To program securely, however, you should care-fully consider the consequences of your operation when the subtraction of two pointers may result in such large values.

intmax\_t and uintmax\_t. intmax\_t and uintmax\_t are integer types with the greatest width and can represent any value representable by any other inte-ger types of the same signedness. Among other applications, intmax\_t and uintmax\_t can be used for formatted I/O on programmer-defined integer types. For example, given an implementation that supports 128-bit unsigned integers and provides a uint\_fast128\_t type, a programmer may define the following type:


This creates a problem with using these types with formatted output functions, such as printf(), and formatted input functions, such as scanf(). For example, the following code prints the value of x as an unsigned long long, even though the value is of a programmer-defined integer type:

There is no guarantee that this code prints the correct value of x because x may be too large to represent as an unsigned long long.

The intmax\_t and uintmax\_t types are capable of representing any value representable by any other integer types of the same signedness, allowing conversion between programmer-defined integer types (of the same signed-ness) and intmax\_t and uintmax\_t:

Formatted I/O functions can be used to input and output greatest-width integer typed values. The j length modifier in a format string indicates that the following d, i, o, u, x, X, or n conversion specifier will apply to an argument with type intmax\_t or uintmax\_t. The following code guarantees that the cor-rect value of x is printed, regardless of its length, provided that mytypedef\_t is an unsigned type:

In addition to programmer-defined types, there is no requirement that an implementation provide format length modifiers for implementation-defined integer types. For example, a machine with an implementation-defined 48-bit integer type may not provide format length modifiers for the type. Such a machine would still have to have a 64-bit long long, with intmax\_t being at least that large. The CERT C Secure Coding Standard [Seacord 2008], “INT15-C. Use intmax\_t or uintmax\_t for formatted IO on programmer-defined integer types,” provides further examples of this use of the intmax\_t and uintmax\_t types.


We have established a talent pool management system. Through our new employee training program and mentoring program, we assign mentors to provide trainings to our new employees and help them understand their tasks and integrate into our corporate culture. We train up our employees to follow our standardised operational procedures to ensure our service quality and efficiency. We also have a human resource succession plan under which we identify and train up our employees to step into more challenging roles. During the Year, the Group has provided different types of training for its employees, such as the knowledge of property management, services requirement and market situation for the general employees and the knowledge of business communication, customer demands and risk management for the supervisory employees. In addition, we encourage and support employees to participate in external training by providing subsidies.

# OPERATING PRACTICES

Effective management of environmental, social and economic performance throughout the daily operation is considered as the core value of the Group. The Group displays commitment toward sustainable development by maintaining a close relationship with its suppliers and ensuring meticulous standards on its operation and business conduct.

# Supply Chain Management

The Group values the partnership with suppliers and aims to collectively promote sustainable development. The Group is devoted to enhancing operation throughout its supply chains by maximising operational efficiency and minimising ESG risks.

The Group has established the tender procurement management system for the effective management of the procurement process. For the selection of new contractors/suppliers, an evaluation and review mechanism is in place to ensure the compliance of suppliers and supplies quality. For example, we conduct reviews on new contractors/suppliers and verify their basic profile, credit certificates and other documents to ensure the compliance of the suppliers. In addition, the contracts signed between the Group and the contractors/suppliers clearly listed the expectations, policies and requirements of the Group. A safety management guideline is also included in the contract, which requires the contractors/suppliers to provide a safe working environment and sufficient training, information and supervision to their employees. Meanwhile, we regularly evaluate existing contractors/suppliers based on price, quality and other aspects. Unqualified contractors/suppliers will be opt-out to ensure the quality of products and services provided by the suppliers.

Environmental and social risks along the supply chain are also a key concern of the Group. The Group assigns specific personnel to check for the latest development in local supply chain-related policies and identify the potential environmental and social risks. When selecting suppliers, priority is given to those with more outstanding environmental and social performance regarding aspects such as energy conservation, occupational health and safety, supply chain management and anti-corruption. Suppliers having relevant certification or international recognition are usually more highly valued, but on the other hand, those involving in major corruption or safety incident are always downgraded.


Besides, the Group fosters sustainability by implementing green procurement and encouraging the use of eco-friendly products. We use and give priority to eco-friendly products, such as those with water or energy efficiency labels, use fewer packaging materials, have a longer shelf life or are made of recyclable materials. We also select suppliers that are able to deliver materials with short delivery time and delivery distance, where appropriate, to lower carbon emissions from transportation. We also remind our employees to use products purchased earlier to avoid wastage due to products expiring.

During the Year, the Group had a total of 73 major suppliers, divided by region as follows:

Number of Suppliers	2021

Northeast China	7

Central China	2

South China	7

Southwest China	49

Northwest China	8

# Service Quality and Customer Health and Safety

The Group believes that quality control is crucial to the long-term development of the business. The Group achieves responsible operation through the maintenance of quality services and the assurance of the health and safety of the customers. Different policies and measures for controlling and improving service quality and customer health and safety have been adopted in the Group’s property management businesses. Due to the business nature of the Group, it is not involved in any matters related to advertising, product labeling and product recall.

The Group has established the customer relationship management system and acquired ISO 9001:2015 Quality Management System Certification, which provides a quality control guidance to its daily operation. The Group has a professional quality control team which primarily focuses on maintaining service standards, standardising service procedures and supervising service quality throughout the operational processes. To ensure service and consumer satisfaction, we conduct internal reviews on consumer satisfaction at all properties under our management on an annual basis. The quality check and consumer satisfaction results factor in the performance review of project companies and regional companies.

To provide better customer experience and enhance customer service, the Group offers a service hotline for its customers. Through the hotline, our customers can inquire about our services, provide us with their complaints and feedback, and we can follow up and respond in time to provide timely and efficient solutions to the problems of our clients. In addition, residents and property owners can request repair and maintenance services, provide their feedbacks, suggestions and complaints through our Shi Xiang Yue (時相悅) mobile application and the online official account the Group registered with WeChat. The Group has established the customer reporting and complaint management practice guideline and the call center management system, which specified the standards and processes on receiving and handling complaints. The Group records all the complaints received and the complaints received are classified based on their nature, specialization and importance. The relevant department would be informed about the complaints and is responsible for assigning and handling the complaint. During the Year, 15 complaints were received, which were all handled according to the abovementioned procedure.


Economic and political pressures to increase tax revenues in various jurisdictions may make resolving tax disputes more difficult. For example, in recent years, the tax authorities in Europe have disagreed with our tax positions related to hybrid debt, research and development credits, transfer pricing and indirect taxes, among others. We regularly assess the likelihood of the outcome resulting from these examinations to determine the adequacy of our provision for income taxes. Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different from our historical income tax provisions and accruals.

The results from various tax examinations, audits and litigation may differ from the liabilities recorded in our financial statements and could materially and adversely affect our financial results and cash flows in the period or periods for which that determination is made.

# Changes in tax laws or rates, changes in the interpretation of tax laws or changes in the jurisdictional mix of our earnings could adversely affect our financial position and results of operations.

On December 22, 2017, the U.S. enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made a number of substantial changes, including the imposition of a one-time mandatory deemed repatriation tax on the 2017 unrepatriated earnings accumulated offshore since 1986, the establishment of global minimum income tax and base erosion tax provisions related to offshore activities and affiliated party payments, and the reduction of the corporate tax rate from 35% to 21% for U.S. taxable income, resulting in a one-time remeasurement of deferred taxes to reflect their value at a lower tax rate of 21%. These changes to U.S. tax laws will significantly impact how U.S. multinational corporations are taxed on foreign earnings.

The U.S Treasury, Internal Revenue Service and other standard setting bodies are continuing to issue guidance and interpretation relating to the Tax Act. As future guidance is issued, we may make adjustments to amounts previously reported that could materially impact our financial statements.

Our global operations subject us to income and other taxes in the U.S. and in numerous foreign jurisdictions, each with different tax schemes and tax rates. In addition to the changes in tax laws and the interpretation of tax laws and tax rates in these jurisdictions, the jurisdictional mix of our earnings in countries with differing statutory tax rates can have a significant impact on our effective tax rate from period to period.

The tax effect of our investment in Sartorius AG and the jurisdictional mix of our earnings could continue to materially affect our financial results and cash flow.

In addition, the adoption of some or all of the recommendations set forth in the Organization for Economic Co-operation and Development’s project on “Base Erosion and Profit Shifting” (BEPS) by tax authorities in the countries in which we operate, could negatively impact our effective tax rate. These recommendations focus on payments from affiliates in high tax jurisdictions to affiliates in lower tax jurisdictions and the activities that give rise to a taxable presence in a particular country.

# Our reported financial results may be materially affected by changes in accounting principles generally accepted in the United States.

Generally accepted accounting principles in the United States, or U.S. GAAP, are subject to interpretation by the Financial Accounting Standards Board, or FASB, the U.S. Securities and Exchange Commission, or SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change.