# Operations

• On June 1, 2018, Missouri Senate Bill 564 was enacted. The provision of the law applicable to the TCJA was effective immediately; the remaining provisions, including the ability to elect PISA, became effective August 28, 2018. The law required the MoPSC to authorize a reduction in Ameren Missouri’s rates to pass through the effect of the TCJA within 90 days of the law’s effective date. In July 2018, the MoPSC authorized Ameren Missouri to reduce its annual revenue requirement by \$167 million and reflect that reduction in rates beginning August 1, 2018. The reduction included \$74 million for the amortization of excess accumulated deferred income taxes. In addition, Ameren Missouri recorded a reduction to revenue and a corresponding regulatory liability of \$60 million for the excess amounts collected in rates related to the TCJA from January 1, 2018, through July 31, 2018. The regulatory liability will be reflected in customer rates over a period of time to be determined by the MoPSC in the next regulatory rate review. Pursuant to its PISA election, Ameren Missouri is permitted to defer and recover 85% of the depreciation expense and a weighted-average cost of capital return on rate base on certain property, plant, and equipment placed in service after September 1, 2018, and not included in base rates . Accumulated PISA deferrals earn carrying costs at the weighted-average cost of capital, and all approved PISA deferrals will be added to rate base prospectively and recovered over a period of 20 years following a regulatory rate review. PISA mitigates the impacts of regulatory lag between regulatory rate reviews. The remaining 15% of certain property, plant, and equipment placed in service and not eligible for recovery under PISA, unless eligible for recovery under the RESRAM, remain subject to regulatory lag. As a result of the PISA election, additional provisions of the new law apply to Ameren Missouri, including limitations on electric customer rate increases and an electric base rate freeze until April 2020. Both the rate increase limitation and PISA are effective through December 2023, unless Ameren Missouri requests and receives MoPSC approval of an extension through December 2028. See Note 2 – Rate and Regulatory Matters under Part II, Item 8, of this report for information regarding Missouri Senate Bill 564.

• In February 2019, Ameren Missouri announced its Smart Energy Plan, which includes a five-year capital investment overview with a detailed one-year plan for 2019, designed to upgrade Ameren Missouri's electric infrastructure. The plan includes investments that will upgrade the grid and accommodate more renewable energy. Investments under the plan are expected to total approximately \$6.3 billion over the five-year period from 2019 through 2023, with costs largely recoverable under PISA and, for the portion of wind and other renewable generation investments that are not recoverable under PISA, recoverable under the RESRAM.

• In June 2018, the MoPSC approved Ameren Missouri’s Renewable Choice Program, which allows large commercial and industrial customers and municipalities to elect to receive up to 100% of their energy from renewable resources. The tariff-based program is designed to recover the costs of the election, net of changes in the market price of such energy. Based on customer contracts, the program enables Ameren Missouri to supply up to 400 megawatts of renewable wind energy generation, up to 200 megawatts of which it could own. As applicable, the addition of generation by Ameren Missouri would be subject to the issuance of a certificate of convenience and necessity by the MoPSC, obtaining transmission interconnection agreements with MISO or other RTOs, and FERC approval. This generation would be incremental to estimated capital expenditures through 2023 discussed below. Ameren Missouri anticipates finalizing customer interest and pursuing renewable energy projects to fulfill requirements in 2019. Without extension, the option to elect into the program will terminate in the third quarter of 2023.

• In December 2018, the MoPSC issued an order approving Ameren Missouri’s MEEIA 2019 plan. The plan includes a portfolio of customer energy-efficiency programs through December 2021 and low-income customer energy-efficiency programs through December 2024, along with a regulatory recovery mechanism. Ameren Missouri intends to invest \$226 million over the life of the plan, including \$65 million per year through 2021. The plan includes the continued use of the MEEIA rider, which allows Ameren Missouri to collect from, or refund to, customers any difference in actual MEEIA program costs and related lost electric margins and the amounts collected from customers. In addition, the plan includes a performance incentive that provides Ameren Missouri an opportunity to earn additional revenues by achieving certain customer energy-efficiency goals, including \$30 million if 100% of the goals are achieved during the period ended December 2021. Additional revenues may be earned if Ameren Missouri exceeds 100% of its energy savings goals.

• Ameren continues to make significant investments in FERC regulated electric transmission businesses. Ameren Illinois expects to invest \$2.2 billion in electric transmission assets from 2019 through 2023, to replace aging infrastructure and improve reliability. ATXI has three MISO-approved multi-value projects: the Spoon River, Illinois Rivers, and Mark Twain projects. The Spoon River project, located in northwest Illinois, was placed in service in February 2018. The Illinois Rivers project involves the construction of a transmission line from eastern Missouri across Illinois to western Indiana. Construction of the Illinois Rivers project is substantially complete, with the last section awaiting the outcome of certain legal proceedings, which will delay the expected completion date to 2020. This delay is not expected to materially affect 2019 rate base or earnings. The Mark Twain project involves the construction of a transmission line from northeast Missouri, connecting the Illinois Rivers project to Iowa. Construction of the Mark Twain project began in the second quarter of 2018, and is expected to be completed by the end of 2019. ATXI’s expected remaining investment in its multi-value projects is approximately \$150 million in 2019, with the total investment expected to be more than \$1.6 billion.

• Ameren Illinois and ATXI use a forward-looking rate calculation with an annual revenue requirement reconciliation for each company’s electric transmission business. Based on expected rate base growth and the currently allowed 10.82% return on common equity, the


2019 revenue requirements included in rates for Ameren Illinois’ and ATXI’s electric transmission businesses are \$297 million and \$177 million, respectively. These revenue requirements represent an increase in Ameren Illinois' and ATXI’s revenue requirements of \$24 million and \$3 million, respectively, primarily because of the rate base growth. These rates will affect Ameren Illinois’ and ATXI’s cash receipts during 2019, but will not determine their respective electric transmission service operating revenues, which will instead be based on 2019 actual recoverable costs, rate base, and return on common equity as calculated under the FERC formula ratemaking framework.

• The return on common equity for MISO transmission owners, including Ameren Illinois and ATXI, is the subject of a FERC complaint case filed in February 2015 challenging the allowed base return on common equity. Ameren Illinois and ATXI currently use the FERC authorized total allowed return on common equity of 10.82% in customer rates. A final FERC order would establish the allowed return on common equity to be applied to the 15-month period from February 2015 to May 2016 and also establish the return on common equity to be included in customer rates prospectively from the effective date of such order, replacing the current 10.82% total return on common equity. In October 2018, the FERC issued an order addressing the remanded issues in an unrelated case. That order proposed a new methodology for determining the base return on equity and required further briefs from the participants. In November 2018, the FERC issued an order related to the February 2015 complaint case and the September 2016 final order, which required briefs from the participants to be filed in February 2019 regarding a new methodology for determining the base return on common equity and whether and how to apply the new methodology to the two MISO complaint cases. Ameren is unable to predict the ultimate impact of the proposed methodology on these complaint cases at this time. As the FERC is under no deadline to issue a final order, the timing of the issuance of the final order in the February 2015 complaint case, or any potential impact to the amounts refunded as a result of the September 2016 final order, is uncertain. See Note 2 – Rate and Regulatory Matters under Part II, Item 8, of this report for information regarding FERC complaint cases. A 50 basis point reduction in the FERC-allowed base return on common equity would reduce Ameren’s and Ameren Illinois’ net income by an estimated \$9 million and \$5 million , respectively, based on each company’s 2019 projected rate base.

• In November 2018, the ICC issued an order in Ameren Illinois’ annual update filing that approved a \$72 million increase in Ameren Illinois’ electric distribution service rates beginning in January 2019. However, Illinois law provides for an annual reconciliation of the electric distribution revenue requirement as is necessary to reflect the actual costs incurred and investment return in a given year with the revenue requirement that was reflected in customer rates for that year. Consequently, Ameren Illinois’ 2019 electric distribution service revenues will be based on its 2019 actual recoverable costs, rate base, and return on common equity as calculated under the Illinois performance-based formula ratemaking framework. The 2019 revenue requirement is expected to be higher than the 2018 revenue requirement because of an expected increase in recoverable costs, expected rate base growth of approximately 8%, and an expected increase in the annual average of the monthly yields of the 30-year United States Treasury bonds. The 2019 revenue requirement reconciliation is expected to result in a regulatory asset that will be collected from customers in 2021. A 50 basis point change in the annual average of the monthly yields of the 30-year United States Treasury bonds would result in an estimated \$8 million change in Ameren’s and Ameren Illinois’ net income, based on Ameren Illinois’ 2019 projected year-end rate base.

• Ameren Illinois is allowed to earn a return on its electric energy-efficiency program investments. Ameren Illinois’ electric energy-efficiency investments are deferred as a regulatory asset and earn a return at its weighted-average cost of capital, with the equity return based on the annual average of the monthly yields of the 30-year United States Treasury bonds plus 580 basis points. The equity portion of Ameren Illinois’ return on electric energy-efficiency investments can be increased or decreased by up to 200 basis points, depending on the achievement of annual energy savings goals. Pursuant to the FEJA, Ameren Illinois plans to invest up to \$100 million per year in electric energy-efficiency programs through 2023 and will earn a return on those investments. The ICC has the ability to reduce electric energy-efficiency savings goals if there are insufficient cost-effective programs available or if the savings goals would require investment levels that exceed amounts allowed by legislation. The electric energy-efficiency program investments and the return on those investments are collected from customers through a rider and are not included in the electric distribution formula ratemaking framework. See Note 2 – Rate and Regulatory Matters under Part II, Item 8, of this report for information regarding Ameren Illinois’ energy-efficiency program.

• In November 2018, the ICC issued an order approving a stipulation and agreement that resulted in an annual natural gas rate increase of \$32 million, based on a 9.87% return on common equity, a capital structure composed of 50% common equity, and a rate base of \$1.6 billion. This increase reflects the reduction in the federal statutory corporate income tax rate enacted under the TCJA, as well as the increase in the Illinois corporate income tax rate that became effective in July 2017, which collectively decreased annual rates by approximately \$17 million. The new customer rates were effective in November 2018. As a result of this order, the rate base under the QIP rider was reset to zero. Ameren Illinois used a 2019 future test year in this proceeding.

• Ameren Missouri’s next scheduled refueling and maintenance outage at its Callaway energy center is scheduled for the spring of 2019. During the 2017 refueling, Ameren Missouri incurred maintenance expenses of \$35 million. During a scheduled refueling, which occurs every 18 months, maintenance expenses increase relative to non-outage years. Additionally, depending on the availability of its other generation sources and the market prices for power, Ameren Missouri’s purchased power costs may increase and the amount of excess


# CONTENTS INDEX

GRI
Standard	Descriptions	HKEx ESG
Reporting
Guide	Remarks	Page No.

GRI 100: Universal Disclosures 2016

GRI 102: General Disclosures 2016

102-1	Name of the organisation		About Our Group	8

102-2	Activities, brands, products and
services		About Our Group	8-11

102-3	Location of headquarters		About Our Group	8

102-4	Location of operations		About Our Group	8

102-5	Ownership and legal form		About Our Group	8-11

102-6	Markets served		About Our Group	8

102-7	Scale of the organisation		About Our Group	10

102-8	Information on employees and
other workers	KPI B1.1	Value for People,
Sustainability Performance	56-58,
83-85

102-9	Supply chain	KPI B5.1	Value for People,
Sustainability Performance	62-65, 87

102-10	Significant changes to the
organization and its supply chain		There were no significant changes
to size, structure or ownership
during the reporting period	/

102-11	Precautionary Principle or approach		Our Enhanced Corporate
Governance	22-24

102-12	External initiatives		Sustainability Awards and
Professional Memberships	88-93

102-13	Membership of associations		Sustainability Awards and
Professional Memberships	94, 95

102-14	Statement from senior decision-
maker		Message from Management	2

102-16	Values, principles, standards, and
norms of behaviour		Our Enhanced Corporate
Governance	24

102-18	Governance structure		Our Enhanced Corporate
Governance	22-24

102-40	List of stakeholder groups		Our Materiality Approach	25


GRI
Standard	Descriptions	HKEx ESG
Reporting
Guide	Remarks	Page No.

102-41	Collective bargaining agreements		The majority of Henderson
Land's employees are in Hong
Kong where there is no statutory
recognition of collective
bargaining agreements	/

102-42	Identifying and selecting
stakeholders		Our Materiality Approach	25-27

102-43	Approach to stakeholder
engagement		Our Materiality Approach	25-27

102-44	Key topics and concerns raised		Our Materiality Approach	25-27

102-45	Entities included in the
consolidated financial statements		About Our Group	11

102-46	Defining report content and
topic Boundaries		Stakeholder Engagement and
Materiality Assessment	104

102-47	List of material topics		Our Materiality Approach,
Stakeholder Engagement and
Materiality Assessment	26, 104

102-48	Restatements of information		We have not restated information
from previous years	/

102-49	Changes in reporting		There are no significant changes
from previous reporting periods
in the list of material topics and
topic boundaries	/

102-50	Reporting period		About this Report	13

102-51	Date of most recent report		Our Sustainability Report 2019
was published in April 2020	/

102-52	Reporting cycle		About this Report	13

102-53	Contact point for questions
regarding the report		About this Report	13

102-54	Claims of reporting in accordance
with the GRI Standards		About this Report	13


Aspect	KPI	Description	Statement/Section	Page No.

SUBJECT AREA (B) SOCIAL

B1: EMPLOYMENT

B1	General
disclosure	Information on:
(a)   the policies; and
(b) compliance	(a)   The people behind the
process;
(b) The Group complied with
relevant laws and
regulations and there was
no relevant material
non-compliance during the
reporting period	39–40

B1.1	Total workforce by gender,
employment type, age group and
geographical region.	The people behind the process	40

B1.2	Employee turnover rate by gender,
age group and geographical
region.	The Group shall improve data
collection system for future
disclosure	—

B2: HEALTH AND SAFETY

B2	General
disclosure	Information on:
(a)   the policies; and
(b) compliance	(a)   The people behind the
process;
(b) The Group complied with
relevant laws and
regulations and there was
no relevant material
non-compliance during the
reporting period	39

B2.1	Number and rate of work-related
fatalities.	The people behind the process	39

B2.2	Lost days due to work injury.	The people behind the process
The people behind the process	39

B2.3	Description of occupational health
and safety measures adopted, how
they are implemented and
monitored.	39

B3: DEVELOPMENT AND TRAINING

B3	General
disclosure	Policies	The people behind the process	38

B3.1	The percentage of employees
trained by gender and employee
category (e.g. senior management,
middle management).	The Group shall improve data
collection system for future
disclosure	—

B3.2	The average training hours
completed per employee by gender
and employee category.	The people behind the process	38


Aspect   KPI	Description	Statement/Section	Page No.

B4: LABOUR STANDARDS

General
disclosure	Information on:
(a)   the policies; and
(b) compliance	(a)   The people behind the
process;
(b) The Group complied with
relevant laws and
regulations and there was
no relevant material	41

B4		non-compliance during the
reporting period

B4.1	Description of measures to review
employment practices to avoid
child and forced labour.	The people behind the process	41

B4.2	Description of steps taken to
eliminate such practices when
discovered.	The people behind the process	41

B5: SUPPLY CHAIN MANAGEMENT

General
disclosure	Policies	The making of products	35–36

B5.1	Number of suppliers by
geographical region.	The making of products	36

B5      B5.2	Description of practices relating to
engaging suppliers, number of
suppliers where the practices are
being implemented, how they are
implemented and monitored.	The making of products	35–36

B6: PRODUCT RESPONSIBILITY

General	Information on:	(a) The making of products;	36–38

disclosure	(a)   the policies; and
(b) compliance	(b) The Group complied with
relevant laws and
regulations and there was
no relevant material
non-compliance during the
reporting period

B6.1	Percentage of total products sold
or shipped subject to recalls for
safety and health reasons.	The making of products	37

B6.2B6     	Number of products and service
related complaints received and
how they are dealt with.	The making of products	37

B6.3	Description of practices relating to
observing and protecting
intellectual property rights.	The making of products	38

B6.4	Description of quality assurance
process and recall procedures.	The making of products	36–37

B6.5	Description of consumer data
protection and privacy policies,
how they are implemented and
monitored.	The making of products	38


(b) A master purchase agreement was entered into between the Company and COSCO SHIPPING (Hong Kong) on 15th November 2016 in relation to the provision of shipping and other services, sale of shipping related materials and products and sale of other materials and products in connection with the general trading business of the Group by the relevant member(s) of COSCO SHIPPING Group to the relevant member(s) of the Group, including without limitation: (a) the provision of agency services, technical services and ancillary services, including the collection of market information, technical advisory, promotion and marketing, coordination with suppliers and customers, purchase of raw materials and products from suppliers, the provision of assistance in collecting sale proceeds and the procurement or provision of certain after-sale services; (b) the provision of logistics and transportation services; (c) the sale of other materials and products including construction materials and chemicals; and (d) the solicitation and referral of businesses by COSCO SHIPPING Group to the Group, including recommending products manufactured by the Group to the customers and manufacturers of COSCO SHIPPING Group (collectively the “Purchase Continuing Connected Transactions”) for the three financial years ending 31st December 2019 (the “Master Purchase Agreement”). COSCO SHIPPING (Hong Kong) agrees and will procure COSCO SHIPPING Group to agree with the Group that the transactions contemplated under the Master Purchase Agreement shall be conducted on normal commercial terms and negotiated on arm’s length basis and the service fees, commission and the consideration for the purchase of materials and products shall be at market rates or rates no less favourable to the relevant member(s) of the Group than those available to or from (as appropriate) independent third parties. Part of the services provided by COSCO SHIPPING Group will be charged by adopting pre-determined formulae (for example, provision of agency services, technical services and ancillary services and solicitation and referral of businesses will be charged at certain fixed percentages of the value of the subject matter with reference to market price of comparable services) and the remaining services will be charged by COSCO SHIPPING Group at fixed per unit consideration (for example, provision of logistics and transportation services will be charged at a fixed per unit price based on the quantity of the subject matter involved and the distance of the destination). The prices offered by COSCO SHIPPING Group for services provided to the Group and sale of other materials and products including construction materials and chemicals to the Group shall be at market rates or rates no less favourable to the relevant member(s) of the Group than those available from independent third party suppliers for comparable services and similar materials and products (based on similar amount and similar specifications) respectively. In particular, the relevant purchasing department of the related companies within the Group will obtain quotations from different suppliers (both COSCO SHIPPING Group and independent third party suppliers) in respect of comparable services and a similar type of materials or products (based on similar amount and similar specifications) respectively for comparison. The aggregate amount of the Purchase Continuing Connected Transactions for each of the financial years ending 31st December 2017, 2018 and 2019 would not exceed the relevant cap amounts set out in the table headed “Caps with COSCO SHIPPING Group” (the “Purchase Caps”).

(c) A fuel oil master agreement was entered into between the Company and COSCO SHIPPING (Hong Kong) on 15th November 2016 in relation to trading and supply of fuel oil and/or related products and services between the relevant member(s) of the Group and the relevant member(s) of COSCO SHIPPING Group, including without limitation: (a) purchase or sale of fuel oil and/or related products by the relevant member(s) of the Group from or to the relevant member(s) of COSCO SHIPPING Group (the “Fuel Oil Transactions”); and (b) provision of services by the relevant member(s) of COSCO SHIPPING Group to relevant member(s) of the Group to carry out arrangements at the instruction of and for and on behalf of the relevant member(s) of the Group from time to time to enter into fuel oil and/or related products swap contracts and/or derivatives with independent third parties to facilitate the relevant member(s) of the Group to hedge against the risk of fuel oil and/or related products price fluctuation under the fuel oil and/or related products transactions of its business of providing fuel oil and/or related products and services including marine bunker supplies, trading of fuel oil and related products and broker services (the “Fuel Oil Financial Services”) (collectively the “Fuel Oil Continuing Connected Transactions”) for the three financial years ending 31st December 2019 (the “Fuel Oil Master Agreement”). COSCO SHIPPING (Hong Kong) agrees and will procure COSCO SHIPPING Group to agree with the Group that a) the transactions contemplated under the Fuel Oil Master Agreement shall be conducted on normal commercial terms and negotiated on arm’s length basis and the service fees and the consideration for the sale or


purchase of fuel oil and/or related products shall be at market rates or rates no less favourable to the relevant member(s) of the Group than those available to or from (as appropriate) independent third parties and for this purpose, the following pricing policies will be followed (aa) fixed per unit consideration would be payable by or to the Group (as appropriate); (bb) in determining the market rates for sale or purchase of fuel oil and/or related products, the parties would refer to the mean price of fuel oil traded through Singapore as published by S&P Global Platts or market price of fuel oil as published by the government authority or other recognised organisations of supply ports in the pricing month or at the time of quotation as reference; (cc) the Group would also consider the prices offered to or by the independent third parties (based on similar quantity of fuel oil and/or related products) and compare to those offered to or by COSCO SHIPPING Group. In particular, the relevant sales and purchasing department (as appropriate) of the related companies within the Group will compare the selling price offered to or by different parties (both COSCO SHIPPING Group and the independent third parties) in respect of a similar quantity of fuel oil and/or related products for comparison; and b) the relevant member(s) of COSCO SHIPPING Group would not charge member(s) of the Group any service fee in relation to the provision of the Fuel Oil Financial Services; member(s) of the Group shall only be responsible for all amounts payable to independent third parties (together with the related handling fees and other charges charged by such independent third parties) by relevant member(s) of COSCO SHIPPING Group for and on behalf of member(s) of the Group under the fuel oil and/or related products swap contracts and/or derivatives. The aggregate amount of the Fuel Oil Continuing Connected Transactions for each of the financial years ending 31st December 2017, 2018 and 2019 would not exceed the relevant cap amounts set out in the table headed “Caps with COSCO SHIPPING Group” (the “Fuel Oil Caps”).

(d) A financial services master agreement was entered into between the Company and COSCO Finance on 15th November 2016 in relation to the provision of a range of financial services, including the deposits services, loan services, settlement services, remittance services, entrusted loan services (as lending agent in entrusted loan arrangements among members of the Group) and acceptance bill services by COSCO Finance to the Group (collectively the “Financial Services Continuing Connected Transactions”) for the three financial years ending 31st December 2019 (the “Financial Services Master Agreement”). The transactions contemplated under the Financial Services Master Agreement shall be conducted on normal commercial terms and negotiated on arm’s length basis and the terms of the transactions (including the interest receivable by the Group and the fees (including the service fees and handling charges) payable under the financial services to COSCO Finance) shall be at market rates or rates no less favourable to the relevant member(s) of the Group than those available to or from (as appropriate) independent third parties. It was agreed that the interest payable to or receivable by the Group (as appropriate) or service fees payable by the Group for the services are (a) the interest rate for the deposit services shall be no lower than: (i) the floor rate for the same category of deposit services stipulated by the People’s Bank of China from time to time; and (ii) the rate for the same category of deposit services offered by independent commercial banks in the PRC; (b) the interest rate for the loan and entrusted loan services shall be no higher than: (i) the cap rate for the same category of loan services stipulated by the People’s Bank of China from time to time; and (ii) the rate for the same category of loan services charged by independent commercial banks in the PRC; (c) service fees of other services approved by China Banking Regulatory Commission shall be determined in accordance with the following pricing principles: (i) the price to be complied with the fee standards prescribed by the People’s Bank of China or China Banking Regulatory Commission; (ii) no higher than those charged by independent commercial banks in the PRC for services of similar nature; and (iii) no higher than those charged by COSCO Finance to other member company(ies) of COSCO SHIPPING Group for services of similar nature. The aggregate amount of the Financial Services Continuing Connected Transactions for each of the financial year ending 31st December 2017, 2018 and 2019 would not exceed the relevant cap amounts set out in the table headed “Caps with COSCO SHIPPING Group” (the “Financial Services Caps”).


# We may change our target assets, financing and investment strategy and other operational policies without stockholder consent, which may adversely affect the market price of our common stock and our ability to make distributions to stockholders.

Within our overall investment guidelines, we may change our target assets financing strategy, and investment guidelines at any time without the consent of our stockholders, which could result in our making investments that are different from, and possibly riskier than, the investments described in this Annual Report on Form 10-K. Our Board also determines our other operational policies and may amend or revise such policies, including our policies with respect to our REITqualification, acquisitions, dispositions, operations, indebtedness and distributions, or approve transactions that deviate from these policies, without a vote of, or notice to, our stockholders. A change in our targeted investments, financing strategy, investment guidelines and other operational policies may increase our exposure to interest rate risk, default risk and real estate market fluctuations, all of which could adversely affect the market price of our common stock and our ability to make distributions to our stockholders.

# We operate in a highly competitive market for investment opportunities and related financing and competition may limit our ability and financing to acquire desirable investments in our target assets, obtain necessary financing and could also affect the pricing of these assets and cost of funds.

We operate in a highly competitive market for investment opportunities and borrowing facilities. Our profitability depends, in large part, on our ability to acquire our target assets at attractive prices and finance them economically. In acquiring and financing our target assets, we will compete with a variety of institutional investors, including other REITs, specialty finance companies, public and private funds, government entities, commercial and investment banks, commercial finance and insurance companies and other financial institutions. Many of our competitors are substantially larger and have considerably greater financial, technical, marketing and other resources than we do. Several other REITs may have investment objectives that overlap with ours, which may create additional competition for investment opportunities and financing. Some competitors may have a lower cost of funds and access to funding sources that may not be available to us, such as funding from the U.S. or foreign governments. Many of our competitors are not subject to the operating constraints associated with REIT tax compliance or maintenance of an exemption from the Investment Company Act. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, competition for investments in our target assets may lead to the price of such assets increasing, which may further limit our ability to generate desired returns. We cannot provide assurance that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this competition, desirable investments in our target assets may be limited in the future and we may not be able to take advantage of attractive investment opportunities from time to time, as we can provide no assurance that we will be able to identify, finance and make investments that are consistent with our investment objectives.

# Risks Related to Our Management and Conflicts of Interest

# We depend on ACM and particularly key personnel. The loss of those key personnel could severely and detrimentally affect our operations.

As an externally managed company, we depend on the diligence, experience and skill of ACM for the selection, acquisition, structuring, hedging and monitoring of our MBS and associated borrowings. We depend on the efforts and expertise of our operating officers to manage our day-to-day operations and strategic business direction. If any of our key personnel were to leave the Company, locating individuals with specialized industry knowledge and skills similar to that of our key personnel may not be possible or could take months. Because we have no employees, the loss of ACM could harm our business, financial condition, cash flow and results of operations.

We have a contract with AVM to administer clearing and settlement services for our securities and derivative transactions. We have also entered into a second contract with AVM to assist us with financing transaction services such as repurchase financings and managing the margin arrangement between us and our lenders for each of our repurchase agreements. We use the services of AVM for these aspects of our business so our executive officers can focus on our daily operations and strategic direction. Further, as our business expands, reliance on AVM to provide us with timely, effective services will increase. In the future, as we expand our staff, we may absorb internally some or


all of the services provided by AVM. Until we elect to move those services in-house, we continue to use AVM or other third-parties that provide similar services. If we are unable to maintain a relationship with AVM or are unable to establish a successful relationship with other third-parties providing similar services at comparable pricing, we may have to reduce or delay our operations and/or increase our expenditures and undertake the repurchase agreement and trading and administrative activities on our own, which could have a material adverse effect on our business operations and financial condition. However, we believe that the breadth and scope of ACM’s experience will enable them to fill any needs created by discontinuing a relationship with AVM.

# There are conflicts of interest in our relationship with ACM and its affiliates, which could result in decisions that are not in the best interests of our stockholders.

We are subject to conflicts of interest arising out of our relationship with ACM and its affiliates. Each of our executive officers and our non-independent directors are also affiliated with JAVELIN and such officers and directors will not be exclusively dedicated to our business. Entities affiliated with Mr. Ulm and Mr. Zimmer are the general partners of ACM and each of Mr. Ulm, Mr. Zimmer, Mr. Staton and Mr. Bell is a limited partner in ACM and a stockholder of JAVELIN.

The Management Agreement with ACM may create a conflict of interest and its terms, including fees payable to ACM, may not be as favorable to us as if they had been negotiated with an unaffiliated third-party. In addition, we may choose not to enforce, or to enforce less vigorously, our rights under the Management Agreement because of our desire to maintain our ongoing relationship with ACM. ACM maintains a contractual and fiduciary relationship with us. The Management Agreement with ACM does not prevent ACM and its affiliates from engaging in additional management or investment opportunities some of which will compete with us. ACM and its affiliates may engage in additional management or investment opportunities that have overlapping objectives with ours and may thus face conflicts in the allocation of investment opportunities to these other investments. Such allocation is at the discretion of ACM and there is no guarantee that this allocation would be made in the best interest of our stockholders. We are not entitled to receive preferential treatment as compared with the treatment given by ACM or its affiliates to any investment company, fund or advisory account other than any fund or advisory account which contains only funds invested by ACM (and not of any of its clients or customers) or its officers and directors. Additionally, the ability of ACM and its respective officers and employees to engage in other business activities, including their activities related to JAVELIN, may reduce the time spent managing our activities.

# We compete with current and future investment entities affiliated with ACM.

There are conflicts of interest in allocating investment opportunities among us and other funds, investment vehicles and ventures managed by ACM. There is a significant overlap in the assets and investment strategies of us and JAVELIN. Although ACM may dedicate certain trading and investment personnel to serve us only, in most cases the same trading and investment personnel may provide services to both entities. ACM and its affiliates may in the future form additional funds or sponsor additional investment vehicles and ventures that have overlapping objectives with us and therefore may compete with us for investment opportunities and ACM resources. ACM has an allocation policy that addresses the manner in which investment opportunities are allocated among the various entities and strategies for which they provide investment management services. However, we cannot assure you that ACM will always allocate every investment opportunity in a manner that is advantageous for us; indeed, we may expect that the allocation of investment opportunities will at times result in our receiving only a portion of, or none of, certain investment opportunities.

# Resolution of potential conflicts of interest in allocation of investment opportunities.

In allocating investment opportunities among us and any other funds or accounts managed by them, ACM's personnel are guided by the principles that they will treat all entities fairly and equitably, they will not arbitrarily distinguish among entities and they will not favor one entity over another.

In allocating a specific investment opportunity among us and JAVELIN, ACM will make a determination, exercising their judgment in good faith, as to whether the opportunity is appropriate for each entity. Factors in making such a determination may include an evaluation of each entity's liquidity, overall investment strategy and objectives, the composition of the existing portfolio, the size or amount of the available opportunity, the characteristics of the


axial ratios remains to be determined, but the important point is that the current best upper limit for axial ratios with respect to VSAs is around 3, and it would be unusual to find a VSA with an axial ratio far above that. There are two caveats worth noting however. Firstly, large axis ratios result in large magnitude variations between telescopic exposures, and may cause high-amplitude bodies to be missed entirely, biasing our sample. Secondly, our method of determining axis ratios from the light curve from the formula of Kwiatkowski et al. (2010a) provides a lower limit. As a result, the axis ratios of small NEAs may be systematically larger than reported here.

Nakamura et al. (2011) concluded that small fast-rotating asteroids have a tendency to be more spherical than slowly rotating asteroids, but Kwiatkowski et al. (2010a) reportedj ust the opposite. In Fig. 3 we find little correlation between the asteroid periods and their \( a / b \) ratios. Least squares fits to our samples do have slight upslopes however, 0.0198 \( \mathrm { h r } ^ { - 1 } \) on the upper panel, and 0.0835 \( \mathrm { h r } ^ { - 1 } \) on the lower panel, so our samples do have a nominal weak correlation. But these slopes are heavily leveraged by a few points at the right-most edge of the figures and should be interpreted with caution.

Histograms of the axial ratios of our two samples are given in Fig. 4. The \( a / b \) ratio sample has mean and median \( a / b \) ratios of 1.43 and 1.29. Our \( D \le \) 60 m sample does not have enough information to compute axis ratios for all its members, but the mean and median \( a / b \) ratios of the 46 members of the \( a / b \) sample with diameters below 60 m are 1.46 and 1.36 respectively, consistent with the idea that size and axis ratio are not strongly correlated.

We note that there has been some discussion in the literature surrounding the determination of \( a / b \) ratios in Nakamura et al. (2011). Already in 2009, Warner et al. pointed out that low light curve amplitudes (which result in concomitantly smaller axis ratios) may simply be a result of finding the highest amplitude spectral peak in noisy data. In the LCDB itself, a significant portion of the data are in the quality range of \( U \leq 1 + \), meaning that they are of doubtful quality. A fuller explanation as to why some of this data were given such a low quality rating can be additionally found in Warner et al. (2009).

# 3.3. Taxonomic class and density

In addition to period and effective diameter, the LCDB also records the taxonomic class. Out of the 88 asteroids in our \( D \le \) 60 m survey, 83 asteroids were of S-type (silicaceous “stony” objects), and out of the 92 asteroids in our \( a / b \) ratio sample (which does overlap partially with the previous sample), 89 were of S-type as well, making it the most common type in our specific asteroid population. The few other spectral types that were seen in the population were four asteroids in the C-group (carbonaceous objects, including one type B and one F), and three others being in the X-group (metallic objects). It is believed that 20% (Brophy et al., 2012) of the near-Earth asteroid population is C-type, but that they are harder to discover because of their lower albedos. Thus the C types are underrepresented in our sample, reflecting the reality that our observed sample is sharply limited by target brightness. We are not arguing here that the real NEA population is low in C types, but the set of potential targets for the ARM mission is likely to be.

Taxonomic class is linked to asteroid density, but for S-type asteroids we must take the size into consideration as well since, as Carry (2012) observes, the density of S-type asteroids appears to increase with mass. If we look at Fig. 9 in the paperj ust mentioned, S-type asteroids in the ARM size range would have an average bulk density of around 2.6 g \( \mathrm { c m ^ { - 3 } } \), though the density of S-type can be as low as 1.9 g \( \mathrm { c m } ^ { - 3 } \) such as for Itokawa (Fujiwara et al., 2006). Given the predominance of S types among the small near-Earth asteroid population, it is reasonable to conclude that the density of most potential ARM targets will be in the same range though the density of a specifically


chosen C-type target would be lower, around 1 g \( \mathrm { c m } ^ { - 3 } \)(Britt et al., 2002). The composition, mass and internal properties (rubble pile versus monolith) will all play a role here.

# 4. Conclusions

We have collected the available data on very small asteroids (VSAs) with the highest quality light curves. Unsurprisingly, a VSA will most likely be found to have a period under the “spin barrier” of 2.2 hrs; the average period from the \( D \le \) 60 m sample analyzed here is 0.67 hrs or 40 minutes. The lower limit for the period of the current sample reaches down to 25 seconds (2010 \( \mathrm { J L } _ { 8 8 } \), a 13 m diameter S-type) or even less (2014 RC, a 12-22 m Sq-type, with a period of 16 seconds) though shorter periods are possible.

With respect to structure, our results imply that a VSA will probably be a monolithic structure in which a singular boulder is held together by its own tensile strength, as opposed to a “rubble pile” in which many boulders are gravitationally bound together, although arguments from Holsapple (2003) and new evidence from Mommert et al. (2014) show that this may not necessarily be true.

We used the information on the light curves provided by various surveys to estimate the axial ratio. The VSAs in our samples have an average minimum \( a / b \) ratio of about 1.4, and the VSA with the greatest axial ratio was found to be 2007 \( \mathrm { T S _ { 2 4 } } \) at 2.8. Alternate analyses of some asteroid light curves have given slightly different values, but all VSAs observed to date are consistent with axial ratios less than three. The mission outlined by the KISS report discussed a capture bag capable of accommodating a 10x15 meter asteroid with a 2:1 axis ratio. Most (\( > \) 90%) of our \( D \le \) 60 m restricted sample have an \( a / b \) ratio less than 2, but a few exceed this value. We do note that our method of determining axial ratios from Kwiatkowski et al. (2010a) provides the minimum axial ratio consistent with the light curve amplitude, and so the values reported here are lower limits.

The composition of most potential targets is likely to be rich in silicates (S-type taxonomic class). The KISS study suggested that C-type asteroids would make more interesting targets be-cause of their more diverse composition, which include water, carbon compounds, rock and metal. However, such asteroids are not common within the currently characterized small near-Earth as-teroid population, though four C-group (including sub-types B and F) and three X-types appear in our sample. Though the real NEA population is not necessarily this low in C types, the list of potential ARM targets is likely to be poorer in carbonaceous bodies than might otherwise be expected.

# 5. Acknowledgements

The authors thank Duncan Steel and David Asher for thoughtful comments which much im-proved this paper. This work was supported in part by the Natural Sciences and Engineering Council of Canada and the Canadian Space Agency (CSA) through the ASTRO CSA Cluster.

# References

Britt, D. T., Yeomans, D., Housen, K., and Consolmagno, G. (2002). Asteroid Density, Porosity, and Structure. Asteroids III, pages 485–500.

Brophy, J., Culick, F., Friedman, L., and 31 others (2012). Asteroid retrieval feasibility study. Technical report, Keck Institute for Space Studies, Pasadena, California.


# 1. REPORT OVERVIEW (CONTINUED)

# • Stakeholder Engagement (Continued)

# Materiality Assessment (Continued)

1. 報告概覽（續）

• 利益相關者參與（續）

關鍵性評估（續）

Category
類別	ESG Issues
環境、社會及管治問題	Importance
重要性

Environmental Issues
環境問題	1.   Greenhouse gas emission
溫室氣體排放	Medium
中

2.   Energy consumption
能源消耗	Medium
中

3. Water consumption
水資源消耗	Medium
中

4. Waste
廢棄物	Medium
中

5.   Environmental impact of construction
建造對環境的影響	Medium
中

6.   Green building certification
綠色建築認證	Medium
中

7.   Customer engagement in environmental issues
客戶參與環境問題	Medium
中

8.   Use of chemicals
使用化學品	Medium
中

Social Issues
社會問題	9.   Local community engagement
當地社區參與	Medium
中

10. Community investment
社區投資	Medium
中

11. Occupational health and safety
職業健康及安全	High
高

12.   Labour standards in supply chain
供應鏈勞工準則	High
高

13. Training and development
培訓及發展	High
高

14. Employee welfare
僱員福利	High
高

15.   Inclusion and equal opportunities
包容及平等機會	High
高

16.   Talent attraction and retention
吸引及挽留人才	High
高


# 1. REPORT OVERVIEW (CONTINUED)

# • Stakeholder Engagement (Continued)

# Materiality Assessment (Continued)

1. 報告概覽（續）

• 利益相關者參與（續）

關鍵性評估（續）

Category
類別	ESG Issues
環境、社會及管治問題	Importance
重要性

Operating Issues
營運問題	17. Economic value generated
所產生經濟價值	Medium
中

18. Corporate governance
企業管治	High
高

19. Anti-corruption
反貪污	High
高

20. Supply chain management
供應鏈管理	High
高

21. Customer satisfaction
客戶滿意度	High
高

22. Customer privacy
客戶私隱	High
高

# 2. THE ENVIRONMENT

# • Environmental Strategy and Management Approach

The company has established regular emission reduction policies such as supporting our people to reduce the use of conventionally fuelled vehicles, to use paper more efficiently and conduct paper-less meetings, encouraging our employees to turn off the lights and air conditioners in unmanned rooms. We also try to replace business trip and meeting where telephone and video conferencing are possible. In addition, the company also actively purchases energy-efficient office equipment, purchases and uses energy-efficient air conditioners, recycles waste paper, cardboard and plastic bottles, and effectively reduces the burden onto the environment caused by the Group's business operations.

2. 環境

• 環境策略及管理方法

本公司已制定常規減排政策，如鼓勵我們的員工減少使用傳統燃油汽車、更善用紙張及召開無紙化會議、鼓勵僱員在房間無人使用時關閉電燈及空調。如可以使用電話及視像會議，我們亦嘗試用以取代商務旅行及會議。此外，本公司亦積極購置節能辦公設備，購置及使用節能空調，循環使用廢紙、紙板及塑料瓶，有效地減少本集團業務營運對環境造成的負擔。


# 1. Anomalous paramagnetism \( T > T _ { c 0 } \))

In the paramagnetic state of ferromagnetic and anti-ferromagnetic systems, the muon spin depolarization at zero external field has contributions from the static nu-clear dipolar fields and the fluctuating fields from electron spins. The nuclear spin contribution is well reproduced by the Gaussian Kubo-Toyabe (GKT) function derived from the Gaussian distribution of the local field (\( B _ { \mathrm { l o c } } \)),which is a good approximation for a dense ensemble of randomly orientated nuclear magnetic moments.18 The GKT function is written as

\[ G _ { \mathrm { G K T } } ( t ) = \frac { 1 } { 3 } + \frac { 2 } { 3 } \left[ 1 - ( \Delta t ) ^ { 2 } \right] \exp \left[ - \frac { ( \Delta t ) ^ { 2 } } { 2 } \right] , \qquad ( 2 ) \]

where \( \Delta / \gamma _ { \mu } = \langle B _ { \mathrm { l o c } } ^ { 2 } \rangle ^ { 1 / 2 } \) corresponds to the root-mean-square for the distribution of the local magnetic field (where \( \gamma _ { \mu } = 2 \pi \times 1 3 5 . 5 3 \) MHz/T is the muon gyromag-netic ratio). On the other hand, the dynamical electron spin contribution is given as \( \exp ( - \lambda t ) \) with the relax-ation rate \( \lambda \). Then, the depolarization function G(t) is described by the product of the two contributions:

\[ G ( t ) = G _ { \mathrm { G K T } } ( t ) \exp ( - \lambda t ) . \eqno ( 3 ) \]

Figure 6(a) shows the zero-field (ZF)-\( \mu ! \) SR spectra at 300 K and 80 K (i.e., above and below \( T _ { \mathrm { c 1 } } \)), where no sign of the emergence of the spontaneous internal mag-netic field, such as oscillation and/or fast damping, is observed below \( T _ { \mathrm { c 1 } } \). This immediately leads us to the conclusion that no long-range magnetic order is present below \( T _ { c 1 } \), which is in qualitative agreement with the pre-vious result.11 The temperature dependence of \( \lambda \) deduced by a curve fitting is plotted in the inset of Fig. 6(a).

The spectra in Fig. 6(a) including the one at 18 K show that the exponential damping gradually overcomes the GKT depolarization below 40 K. Figure 6(b) shows \( \mu \) SR spectra at 18 K measured with ZF and longitudinal fields (LFs) of 10 mT and 100 mT. Generally, the expo-nential damping due to the electron spin fluctuation does not depend much on the LF because the fluctuation rate of the dynamical field from the ordinary paramagnetic moments is much larger than the Larmor frequency of the muon spin precession. However, the depolarization is quenched by the application of a relatively weak LF, which indicates that \( B _ { \mathrm { l o c } } \) is much weaker than the LF and that it is quasistatic within the time window of \( \mu \) SR (\( > 1 0 ^ { - 5 } \) s). These features allow us to estimate an up-per limit for the mean hyperfine field at the muon site, \( B _ { \mathrm { l o c } } \, \simeq \, \Delta / \gamma _ { \mu } \, \lesssim \, 2 \) mT, and that of the fluctuation rate \( \nu \lesssim \) 0.5 MHz. We also performed curve fitting for the LF dependence of the \( \mu \) SR spectra at 18 K by replac-ing the exponential term in Eq. (3) with the Lorentzian Kubo-Toyabe (LKT) function for a finite LF:

FIG. 6. (Color online) (a) Zero-field (ZF)-\( \mu ^ { 6 } \) SR time spectra at 300 K, 80 K, and 18 K. The solid curves are the fitted results of Eq. (3). The inset shows the temperature dependence of the relaxation rate. (b) \( \mu ^ { \star } \) SR spectra at 18 K measured with ZF and longitudinal fields (LF = 10 mT and 100 mT) with the results of the curve fitting with Eq.(4).

\[ \begin{array} { l } { \displaystyle G _ { \mathrm { L K T } } ( t ) = \! 1 - \frac { \Delta } { \omega _ { 0 } } j _ { 1 } ( \omega _ { 0 } t ) e ^ { - \Delta t } } \\ { \displaystyle \quad \, - \big ( \frac { \Delta } { \omega _ { 0 } t } \big ) ^ { 2 } [ j _ { 0 } ( \omega _ { 0 } t ) e ^ { - \Delta t } - 1 ] } \\ { \displaystyle \quad \, - \big [ 1 + \big ( \frac { \Delta } { \omega _ { 0 } } \big ) ^ { 2 } \big ] \Delta \int _ { 0 } ^ { t } j _ { 0 } ( \omega _ { 0 } t ^ { \prime } ) e ^ { - \Delta t ^ { \prime } } d t ^ { \prime } , \, \, \, \, ( 4 ) } \end{array} \]

where \( \omega _ { 0 } = \gamma _ { \mu } B _ { 0 } \) is the Larmor frequency of the muon spin precession in the presence of an external field \( B _ { 0 } \), and \( j _ { 0 } \) and \( j _ { 1 } \) denote spherical Bessel functions.19 We note that the results of the curve fitting indicate that the entire volume of the sample exhibits a Lorentzian-like field distribution. Thus, we are led to the conclusion that the dilute magnetic moments of d electrons having an unusually quasistatic characteristic make a significant contribution to the muon depolarization for \( T _ { c 0 } \leq T \leq \)\( T _ { c 1 } \), although their origin is not clear at this stage.

# 2. Inhomogeneous magnetism \( ( T < T _ { c 0 } \))

As is observed for the ZF-\( \mu \) SR spectra in Fig. 7(a), a rapid depolarization develops with decreasing tempera-ture below \( T _ { \mathrm { c 0 } } \). We show the ZF- and LF-\( \mu \) SR spectra at 30 mK measured in the presence of various LFs up to 100 mT in Fig. 7(b). The ZF spectra clearly demonstrate the absence of conventional long-range magnetic order at


FIG. 7. (Color online) (a) ZF-\( \mu \) SR time spectra in the temper-ature range between 4.2 K and 10 K. (b) \( \mu ^ { \circ } \) SR time spectra measured at 30 mK in the presence of various longitudinal fields (LFs) up to 100 mT. The inset shows the earlier part of the spectrum at ZF. The solid lines are the fitted results by using Eq. (6)..

the base temperature. The initial fast depolarization ex-hibits a gradual suppression with increasing LF and is nearly quenched at \( ^ { \dag } \) F = 100 mT. Surprisingly, we also observed a finite slope due to the residual magnetic fluc-tuation in these spectra at a large time, which is almost independent of the LF, even at 30 mK. These features can be observed from the fast damped 2/3 amplitude followed by a slowly relaxing 1 \( / \) 3 component originating from the magnetic ordered state with slow persistent spin dynamics.

In a previous \( \mu \) SR study, Sugiyama et al. analyzed their ZF-\( \cdot \mu \) SR spectra by using a combination of an expo-nentially relaxing cosine oscillation for the damped 2 \( / \) 3 component and an exponential function for the 1 \( / \) 3 tail signal.11 They showed that the ratio of the relaxation rate of the 1 \( / \) 3 tail component \( \lambda _ { \mathrm { t a i l } } \) to the precession frequency \( \omega _ { \mathrm { A F } } \) is close to unity, \( \lambda _ { \mathrm { t a i l } } / \omega _ { \mathrm { A F } } \, \sim \, 1 \), where \( \lambda _ { \mathrm { t a i l } } / \omega _ { \mathrm { A F } } \) corresponds to the field distribution normalized to the mean value of \( B _ { \mathrm { l o c } } \). However, their fitting function is based on an unique precession signal at a spontaneous local field for the conventional magnetic ordered state, \( \lambda _ { \mathrm { t a i l } } / \omega _ { \mathrm { A F } } \ll 1 \) . The observed broad \( B _ { \mathrm { l o c } } \) distribution and residual magnetic fluctuation strongly suggest that a highly inhomogeneous magnetic state appears in the ground state of \( \mathrm { S r } _ { 2 } \)\( \ldots \) 4.

The inset of Fig. 7(b) shows the earlier part of the ZF-\( \mu \) SR spectrum at 30 mK. As mentioned above, the GKT and LKT functions are widely attributed to the \( \mu \) SR spectra for random magnetism in dense and diluted spin systems. However, the ZF spectrum at 30 mK lacks a decrease that usually precedes the asymptotic tail for the GKT function, although it exhibits a Gaussian-like initial depolarization. We attributed this to a broad dis-tribution of \( B _ { \mathrm { l o c } } \), which is not characterized by a sin-gle root-mean-square width, and adopted the Gaussian-broadened Gaussian (GbG) function as a recursive func-tion for the curve fitting.20–22

The GbG function is described as one of the general-ized forms of the GKT function, where \( \Delta \) in Eq. (2) has a distribution with the mean value \( \Delta _ { 0 } \) and root-mean-square width W. \( G _ { \mathrm { G b G } } ( t ) \) for ZF is written as

\[ \begin{array} { c c } { G _ { \mathrm { G b G } } ( t ) = \displaystyle \frac { 1 } { 3 } + \frac { 2 } { 3 } \bigg ( \displaystyle \frac { 1 } { 1 + R ^ { 2 } \Delta _ { 0 } ^ { 2 } t ^ { 2 } } \bigg ) ^ { 3 / 2 } \bigg ( 1 - \displaystyle \frac { \Delta _ { 0 } ^ { 2 } t ^ { 2 } } { 1 + R ^ { 2 } \Delta _ { 0 } ^ { 2 } t ^ { 2 } } \bigg ) } \\ { \times \exp \! \left( - \displaystyle \frac { \Delta _ { 0 } ^ { 2 } t ^ { 2 } } { 2 ( 1 + R ^ { 2 } \Delta _ { 0 } ^ { 2 } t ^ { 2 } ) } \right) \! , \! \! \! \! } \end{array} \]

where R is the ratio of the distribution width, and \( R = W / \Delta _ { 0 } \). For \( R \) = 0, the GbG function is identical to the GKT function with a deep minimum after the ini-tial depolarization. The depth of the minimum decreases with increasing R and becomes almost independent of R for \( R > \) 1. Thus, we imposed the condition 0 \( \le R \le \) 1 in the following analysis. We note that the GbG function does not approach the LKT function, even for \( R \gg \) 1.

For the curve fitting, we presume that G(t) is primar-ily described by the product of the GbG function and a slow exponential decay due to the persistent spin dynam-ics in addition to a supplementary term for exponential damping:

\[ G ( t ) = f G _ { \mathrm { G b G } } ( t ) e ^ { - \lambda t } + ( 1 - f ) e ^ { - \lambda _ { \mathrm { e x t } } t } , \qquad ( 6 ) \]

where f is the volume fraction exhibiting inhomoge-neous magnetism, and \( \lambda \) is the relaxation rate reflecting the spin dynamics. The second exponential term with the relaxation rate \( \lambda _ { \mathrm { e x t } } \) is for extrinsic contributions originat-ing from the magnetically ordered state region with rel-atively fast persistent dynamics, which makes the above muon spin depolarization model unreasonable. The T dependence of f is plotted in the inset of Fig. 8. The in-homogeneous magnetism develops over the almost entire volume of the sample below 6 K. We obtained \( R = 0 . 7 ( 1 ) \) below 4.2 K, whereas R is unity at higher temperatures. This discrepancy might be caused by the lack of data for \( t \sim 0 . 1 \)\( \cdot \ \mu \) s that is masked by the limited time resolu-tion of the pulsed muon beam (∼100 ns). We note that the dynamical LKT function and dynamical spin glass models19 could not reproduce the spectra over the early time range.

The absence of decrease in the \( \mu \) SR time spectra tells us important aspects of the magnetic ground state. Noakes et al. reproduced the shallow decrease in the GbG


	实收资本
(或股本)	其他权益工具	资本公积	减：库存
股	其他综合收
益	专项
储备	盈余公积	未分配利润	所有者权益合计

优先
股	永续
债	其他

一、上年年末余额	313,560,000.00						650,489.01		133,910,895.74	647,665,464.31	1,095,786,849.06

加：会计政策变更

前期差错更正

其他

二、本年期初余额	313,560,000.00						650,489.01		133,910,895.74	647,665,464.31	1,095,786,849.06

三、本期增减变动金额
（减少以“－”号填列）	156,858,905.00				1,361,906,663.14		-378,645.36		11,316,840.98	72,063,368.79	1,601,767,132.55

（一）综合收益总额							488,884.00			112,300,880.41	112,789,764.41

（二）所有者投入和减少
资本	156,858,905.00				1,361,906,663.14						1,518,765,568.14

1．所有者投入的普通股	156,858,905.00										1,518,765,568.14

2．其他权益工具持有者
投入资本

3．股份支付计入所有者
权益的金额

4．其他

（三）利润分配									11,230,088.04	-41,018,288.04	-29,788,200.00

1．提取盈余公积									11,230,088.04	-11,230,088.04	0.00

2．对所有者（或股东）
的分配										-29,788,200.00	-29,788,200.00

3．其他

（四）所有者权益内部结
转							-867,529.36		86,752.94	780,776.42	0.00

1．资本公积转增资本
（或股本）

2．盈余公积转增资本
（或股本）

3．盈余公积弥补亏损

4．设定受益计划变动额
结转留存收益

5．其他综合收益结转留
存收益							-867,529.36		86,752.94	780,776.42	0.00

6．其他


（五）专项储备

1．本期提取

2．本期使用

（六）其他

四、本期期末余额	470,418,905.00				1,361,906,663.14		271,843.65		145,227,736.72	719,728,833.10	2,697,553,981.61

项目	2020 年度

实收资本
(或股本)	其他权益工具	资本公
积	减：库
存股	其他综合
收益	专项
储备	盈余公积	未分配利润	所有者权益合计

优先
股	永续
债	其他

一、上年年末余额	313,560,000.00						332,004.42		129,031,917.89	648,280,183.66	1,091,204,105.97

加：会计政策变更

前期差错更正

其他

二、本年期初余额	313,560,000.00						332,004.42		129,031,917.89	648,280,183.66	1,091,204,105.97

三、本期增减变动金额（减少以
“－”号填列）							318,484.59		4,878,977.85	-614,719.35	4,582,743.09

（一）综合收益总额							318,484.59			48,789,778.50	49,108,263.09

（二）所有者投入和减少资本

1．所有者投入的普通股

2．其他权益工具持有者投入资本

3．股份支付计入所有者权益的金
额

4．其他

（三）利润分配									4,878,977.85	-49,404,497.85	-44,525,520.00

1．提取盈余公积									4,878,977.85	-4,878,977.85	-

2．对所有者（或股东）的分配										-44,525,520.00	-44,525,520.00

3．其他

（四）所有者权益内部结转

1．资本公积转增资本（或股本）

2．盈余公积转增资本（或股本）

3．盈余公积弥补亏损

4．设定受益计划变动额结转留存
收益


具持有者投入
资本

3．股份支付计
入所有者权益
的金额

4．其他

（三）利润分
配											-1,387,
562.40		-1,387,
562.40		-1,387,
562.40

1．提取盈余公
积

2．提取一般风
险准备

3．对所有者
（或股东）的
分配											-1,387,
562.40		-1,387,
562.40		-1,387,
562.40

4．其他

（四）所有者
权益内部结转

1．资本公积转
增资本（或股
本）

2．盈余公积转
增资本（或股
本）

3．盈余公积弥
补亏损

4．设定受益计
划变动额结转
留存收益

5．其他综合收
益结转留存收
益

6．其他

（五）专项储
备								114,18
0.42					114,18
0.42	39,816.
61	153,997
.03

1．本期提取								909,52
5.08					909,52
5.08	161,018
.43	1,070,5
43.51

2．本期使用								-795,3
44.66					-795,3
44.66	-121,20
1.82	-916,54
6.48


（六）其他

四、本期期末
余额	138,7
56,24
0.00				102,53
2,388.
02			635,36
5.25	50,489
,790.6
1		172,24
4,888.
09		464,65
8,671.
97	141,370
,090.21	606,028
,762.18

# 8、母公司所有者权益变动表

本期金额

单位：元

项目	2021 年度

股本	其他权益工具	资本公
积	减：库存
股	其他综
合收益	专项储
备	盈余公
积	未分配
利润	其他	所有者权
益合计

优先股	永续债	其他

一、上年期末余
额	138,75
6,240.0
0				80,286,3
36.50				50,679,2
72.50	51,025,
114.05		320,746,9
63.05

 加：会计政
策变更

    前期
差错更正

    其他

二、本年期初余
额	138,75
6,240.0
0				80,286,3
36.50				50,679,2
72.50	51,025,
114.05		320,746,9
63.05

三、本期增减变
动金额（减少以
“－”号填列）										-14,361
,265.20		-14,361,26
5.20

（一）综合收益
总额										-14,361
,265.20		-14,361,26
5.20

（二）所有者投
入和减少资本

1．所有者投入
的普通股

2．其他权益工
具持有者投入
资本

3．股份支付计
入所有者权益
的金额

4．其他


in-situ measurements from well-separated heliospheric spacecraft inside 2.5 AU give self-consistent results of total open heliospheric flux. However, they found that open flux estimates from multiple spacecraft at the same R increasingly vary as R increases, with the largest discrepancies occurring beyond 2.5 AU (Owens et al. 2008a, Figure 1). They suggested that this could be attributed to a reduced signal-to-noise ratio in spacecraft detection of \( B _ { \mathrm { r } } \) further away from the Sun due to tangential and meridional fluctuations along each magnetic field line that result in these field components bleeding into \( B _ { r } \) measurements (Owens et al., 2008a). In a later set of articles, Lockwood and Owens (2009) and Lockwood, Owens, and Rouillard (2009a,b) revisited this topic and attribute what they term the “flux excess effect” not to small-scale structure introduced by the field line’s own propagation, but to separate large-scale longitudinal solar wind structures that distort the magnetic field (Lockwood, Owens, and Rouillard, 2009b, Figure 1). They derived a correction term to apply to spacecraft \( B _ { r } \) measurements to account for these kinematic effects, and when this is applied, for the time period investigated in their study they produce good agreement between PFSS and spacecraft-derived open flux (Lockwood, Owens, and Rouillard, 2009b, Figure 9). Owens et al. (2017) accounted for this same kinematic contribution to \( B _ { \mathrm { r } } \) instead using observations of sunward suprathermal electron beam or “strahl” to filter out instances where field lines were locally inverted at 1 AU. Their method resulted in higher open fluxes than the kinematic correction, closer to results obtained when averaging \( B _ { \mathrm { r } } \) over one day before taking the unsigned value. Both methods on average fell within the results of averaging \( B _ { \mathrm { r } } \) between one to five days before taking the unsigned value (Owens et al., 2017, Figure 5); however, unlike the temporal averaging technique, these methods attempt to account for the flux excess with more physical justification.

Another way that the differences between both model-derived and spacecraft-observed open flux have been explained is by applying correction factors to the photospheric-field maps to drive coronal models. Wang, Lean, and Sheeley (2000) compared estimates of total open flux from 1971 – 1998 using both the PFSS model and spacecraft observations and found, with a few notable exceptions (e.g. 1978 – 1980 and 1985 – 1989), that they agree remarkably well when using a latitude [λ] dependent saturation correction factor. The photospheric field used to derive the open flux was a combination of traditional Carrington photospheric magnetic- field synoptic maps from Mount Wilson (MWO) and Wilcox (WSO) Solar Observatories. It was necessary to use WSO maps from 1976 – 1995 because the MWO magnetograph suffered from instrumentation issues during this period. They also assumed, based on previous work (Wang and Sheeley, 1995), that the MWO correction factor \( ( 4 . 5 \! - \! 2 . 5 \mathrm { s i n } ^ { 2 } \, \lambda \)) was equally applicable to both the MWO and WSO observations, as both the instruments are very similar to each other and use the same Fe I 5250 A˚ line to derive the magnetic field. However, Svalgaard (2006) challenged the application of the MWO saturation correction to WSO data, arguing that it is specific to the MWO instrument and that a constant correction factor of 1.85 (updated from Svalgaard, Duvall, and Scherrer 1978, originally 1.8) is the appropriate correction factor for WSO data. Other studies, spanning several years (Owens et al., 2008b, Linker et al., 2016) and focusing on one Carrington rotation (Linker et al., 2017), used photospheric-field maps


derived from other observatories and found similar discrepancies between model-derived and spacecraft-measured \|Br\|. In all of these studies, in-situ observations on average produced larger \|Br\| estimates than models, except Linker et al. (2016) where a correction factor of 1.5 was applied to the photospheric-field maps for the results to agree.

Riley (2007) separately applied both a constant 1.8 scaling factor and the MWO latitude-dependent correction to WSO input maps from 1976 – 2007 and calculated total open flux using the PFSS model for both sets of maps. He found that the maps with the MWO saturation correction factor applied to them pro-duced the best overall agreement with the heliospheric derived fluxes but noted significant mismatches during the periods of solar minimum, exactly when one would expect the agreement to be best. For the case of the 1.8 saturation factor applied to the WSO maps, the open-flux results agreed well with the heliospheric values only during solar minimum and under-predicted them for all other times. To explain this Riley proposed and tested the idea that interplanetary coro-nal mass ejections (ICMEs) propagating out into space yet still magnetically connected back to the Sun are detected by spacecraft in the same way that coronal hole open flux is. Riley argued that the total unsigned heliospheric flux is comprised of open coronal hole and closed ICME fluxes, especially during solar maximum. This assumption is reasonable, since distinguishing between open field lines and closed ones from ICMEs still rooted back at the Sun in spacecraft observations, especially when the front of the ICME is far beyond 1 AU, is generally very difficult. Using a simple model to estimate heliospheric ICME flux from sunspot number, Riley found an extremely good match between the combined ICME plus WSO open-flux estimates and heliospheric values. While not claiming to have settled the issue, Riley’s results nonetheless provided an alternative explanation for the temporal variation of observed heliospheric flux without having to resort to correcting the WSO magnetic field data with the MWO saturation correction factor. Owens et al., in a series of articles (Owens and Crooker, 2006; Owens et al., 2007; Owens, Crooker, and Lockwood, 2011), similarly argued that much, if not all, of the variation of heliospheric flux can be explained by a constant open solar magnetic flux baseline or floor with the addition of a time-varying, solar-cycle-dependent closed ICME magnetic-flux component.

Alternatively, total open flux can be determined by identifying coronal holes in chromospheric or coronal observations. Coronal hole areas are calculated from observations after their boundaries are determined either through manual (Harvey and Recely, 2002) or automated (e.g. Henney and Harvey, 2005; Scholl and Habbal, 2008; Krista and Gallagher, 2009; Lowder et al., 2014; Verbeeck et al., 2014; Boucheron, Valluri, and McAteer, 2016; Caplan, Downs, and Linker, 2016; Garton, Gallagher, and Murray, 2018; Hamada et al., 2018) methods. To derive open flux, coronal-hole contours are paired with corresponding synoptic photospheric-field maps. The advent of high- resolution coronal EUV images allows for an independent estimate of the open flux in comparison to model estimates and in-situ observations for the past decade. Observationally derived coronal holes also provide constraints on model-derived coronal hole boundaries.

In this article, we estimate total open magnetic flux from 1990 – 2013 in two different ways using global photospheric magnetic-field maps derived from


额	8.00				60		00	197.79	4		.14		29	55	74

 加：会计政
策变更

    前期
差错更正

     同一
控制下企业合
并

    其他

二、本年期初余
额	535,5
29,90
8.00				523,36
4,322.
60		-35,50
0,000.
00	2,663,
197.79	20,601
,364.0
4		-191,8
36,372
.14		854,82
2,420.
29	-15,70
8,964.
55	839,11
3,455.
74

三、本期增减变
动金额（减少以
“－”号填列）							-25149
4.58	353,25
0.34			-9,524,
775.17		-9,423,
019.41	-7,944,
472.57	-17,36
7,491.
98

（一）综合收益
总额							-25149
4.58				-9,524,
775.17		-9,776,
269.75	-7,944,
472.57	-17,72
0,742.
32

（二）所有者投
入和减少资本

1．所有者投入
的普通股

2．其他权益工
具持有者投入
资本

3．股份支付计
入所有者权益
的金额

4．其他

（三）利润分配

1．提取盈余公
积

2．提取一般风
险准备

3．对所有者（或
股东）的分配

4．其他

（四）所有者权
益内部结转


1．资本公积转
增资本（或股
本）

2．盈余公积转
增资本（或股
本）

3．盈余公积弥
补亏损

4．设定受益计
划变动额结转
留存收益

5．其他综合收
益结转留存收
益

6．其他

（五）专项储备								353,25
0.34					353,25
0.34		353,25
0.34

1．本期提取								2,571,
472.72					2,571,
472.72		2,571,
472.72

2．本期使用								-2,218,
222.38					-2,218,
222.38		-2,218,
222.38

（六）其他

四、本期期末余
额	535,5
29,90
8.00				523,36
4,322.
60		-35,7
51,494
.58	3,016,
448.13	20,601
,364.0
4		-201,3
61,147
.31		845,39
9,400.
88	-23,65
3,437.
12	821,74
5,963.
76

上期金额

单位：元

项目	2020 年年度

归属于母公司所有者权益	少数股
东权益	所有者
权益合
计

股本	其他权益工具	资本
公积	减：库
存股	其他
综合
收益	专项
储备	盈余
公积	一般
风险
准备	未分
配利
润	其他	小计

优先
股	永续
债	其他

一、上年期末
余额	538,8
73,33
5.00				544,32
7,610.
89		-35,41
7,956.
80	2,147,
151.77	20,601
,364.0
4		-210,8
09,848
.17		859,72
1,656.
73	-7,180,
982.41	852,540
,674.32

 加：会计
政策变更


# RESULTS

The board of Directors (the “Board”) of the Company is pleased to announce the unaudited condensed consolidated financial results of the Company and its subsidiaries (collectively the “Group”) for the three months ended 31 March 2020, together with the comparative figures for the corresponding period in 2019, as follows.

# QUARTERLY CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

# FOR THE THREE MONTHS ENDED 31 MARCH 2020

	Notes	(Unaudited)
Three months ended
31 March

2020	2019

RMB’000	RMB’000

Revenue	3	60,717	71,103

Cost of sales		(47,795)	(52,784)

Gross profit		12,922	18,319

Other income	4	5,262	8,181

Selling and marketing expenses		(10,385)	(12,344)

Administrative expenses		(8,092)	(12,443)

Share-based compensation expense		—	(2,146)

Research and development expenses		(2,689)	(6,295)

Finance costs	5	(1,196)	(2,390)

Net impairment loss on financial and contract assets		(13,710)	(7,436)

Share of profit of joint ventures		(2,230)	—

Loss before income tax	5	(20,118)	(16,554)

Income tax credit/(expense)	6	2,056	2,635

Loss for the period		(18,062)	(13,919)

Other comprehensive loss

Items that may be subsequently reclassified
 to profit or loss:

 Exchange difference arising on the translation
    of foreign operation		(4,825)	(9,036)

Total comprehensive loss for the period		(22,887)	(22,955)


	Notes	(Unaudited)
Three months ended
31 March

2020	2019

RMB’000	RMB’000

Loss for the period attributable to:

Equity holders of the Company		(18,266)	(13,796)

Non-controlling interests		204	(123)

		(18,062)	(13,919)

Total comprehensive loss
 for the period attributable to:

Equity holders of the Company		(23,091)	(22,832)

Non-controlling interests		204	(123)

		(22,887)	(22,955)

Loss per share for profit attributable to equity
 holders of the Company
 (expressed in RMB cents per share)	8

 Basic		(2.87)	(2.21)

 Diluted		(2.87)	(2.21)


10/23/2019	Subject
2/Supervisory
Firefihgter/Assi
stant Chief of
Training	Subject
2/Supervisory
Firefihgter/Assi
stant Chief of
Training	Reference
1/Firefihgter 1	NR/NYS EMT
(ELECTIVE)	0900-1000

10/24/2019	Subject
2/Supervi
sory
Firefihgte
r/Assistan
t Chief of
Training	Subject
2/Supervi
sory
Firefihgte
r/Assistan
t Chief of
Training	Reference
1/Firefihgter 1	RESCUE
TECHNICIA
N - ROPE
RESCUE	1300-1400


6/14/2019	Subject
2/Supervi
sory
Firefihgte
r/Assistan
t Chief of
Training	Subject
2/Supervi
sory
Firefihgte
r/Assistan
t Chief of
Training	Firefihgter 6	AIRCRAFT
LIVE FIRE
TRAINING	0900-1000

9/25/2019	Subject
2/Supervi
sory
Firefihgte
r/Assistan
t Chief of
Training	Subject
2/Supervi
sory
Firefihgte
r/Assistan
t Chief of
Training	Firefihgter 6	NR/NYS EMT
(ELECTIVE)	0900-1000

10/24/2019	Subject
2/Supervi
sory
Firefihgte
r/Assistan
t Chief of
Training	Subject
2/Supervi
sory
Firefihgte
r/Assistan
t Chief of
Training	Firefihgter 6	RESCUE
TECHNICIA
N - ROPE
RESCUE	1300-1400

3/8/2019	Subject
2/Supervisory
Firefihgter/Assi
stant Chief of
Training	Subject
2/Supervisory
Firefihgter/Assi
stant Chief of
Training	Firefihgter 6	ROPES AND
KNOTS	1000-1100

11/1/2019	Subject
2/Supervi
sory
Firefihgte
r/Assistan
t Chief of
Training	Subject
2/Supervi
sory
Firefihgte
r/Assistan
t Chief of
Training	Firefihgt
er 7	FIREGROUN
D SEARCH
AND
RESCUE	1300-1400

7/12/2019	Subject
2/Supervi
sory
Firefihgte
r/Assistan
t Chief of
Training	Subject
2/Supervi
sory
Firefihgte
r/Assistan
t Chief of
Training	Firefihgter 10	ASSIGNED
A/C
EGRESS/FA
M C-135 FR	0930-1030

11/1/2019	Subject
2/Supervi	Subject
2/Supervi	Firefihgter 10	FIREGROUN
D SEARCH
AND
RESCUE	1300-1400


We see that the adjoint of \( \hat { X } ^ { ( \alpha ) } \) is defined as \( i ( d / d k ) \) in the momentum basis provided that \|φ) also obeys the boundary condition \( \tilde { \phi } ( \Omega ) \, = \, e ^ { - i \alpha } \tilde { \phi } ( - \Omega ) \). Therefore we see \( D ( \hat { X } ^ { ( \alpha ) } ) = D ( \hat { X } ^ { ( \alpha ) \dagger } ) \), and so \( \hat { X } ^ { ( \alpha ) } \) is self-adjoint.

Now, since the operators \( \hat { X } ^ { ( \alpha ) } \) are self-adjoint, they have spectral decompositions. The spectrum of the oper-ator \( \bar { X } ^ { ( \alpha ) } \)(for fixed \( \alpha \)) is discrete,\( \mathrm { s p e c } ( \hat { X } ^ { ( \alpha ) } ) = \{ x _ { n } ^ { ( \alpha ) } : = \)\( \textstyle { \frac { 2 \pi n + \alpha } { 2 \Omega } } \} _ { n \in \mathbb { Z } } \), and describes a one-dimensional lattice. The corresponding eigenvectors, \( \{ | x _ { n } ^ { ( \alpha ) } \rangle \} _ { n \in \mathbb { Z } } \), are represented in the momentum eigenbasis as

\[ ( k | x _ { n } ^ { ( \alpha ) } ) = \frac { 1 } { \sqrt { 2 \Omega } } e ^ { - i k x _ { n } ^ { ( \alpha ) } } . \eqno ( \mathrm { A 5 } ) \]

These eigenvectors are orthogonal and admit a resolu-tion of the identity:

\[ \sum _ { n \in \mathbb { Z } } | x _ { n } ^ { ( \alpha ) } ) ( x _ { n } ^ { ( \alpha ) } | = \mathbb { 1 } \qquad \qquad \qquad ( { \mathrm { A 6 } } ) \]

. Crucially, the position eigenvectors from different self-adjoint extensions are not orthogonal:

\[ ( x _ { n } ^ { ( \alpha ) } | x _ { n ^ { \prime } } ^ { ( \alpha ^ { \prime } ) } ) = \mathrm { s i n c } \left[ ( x _ { n } ^ { ( \alpha ) } - x _ { n ^ { \prime } } ^ { ( \alpha ^ { \prime } ) } ) \Omega \right] . \qquad ( \mathrm { A 7 } ) \]

Note that the union of the spectra of the entire family of self-adjoint extensions provides a covering of R. There-fore, it is possible to construct an overcomplete contin-uum basis by taking the union of eigenbases of the family of self-adjoint extensions, i.e., \|x) := \|x(α)n \( ) \iff x \)\( \therefore \)=\( \begin{array} { r } { x _ { n } ^ { ( \alpha ) } : = \frac { 2 \pi n + \alpha } { 2 \Omega } } \end{array} \).

It is then simple to write down the Shannon sampling theorem for a bandlimited function \( \psi \):

\[ \begin{array} { l l } { { \displaystyle \psi ( x ) = ( x | \psi ) } } & { { \displaystyle ( \mathrm { A } 8 ) } } \\ { { \displaystyle ~ ~ ~ ~ ~ = \sum _ { n \in \mathbb { Z } } ( x | x _ { n } ^ { ( \alpha ) } ) ( x _ { n } ^ { ( \alpha ) } | \psi ) } } & { { \displaystyle ( \mathrm { A } 9 ) } } \\ { { \displaystyle ~ ~ ~ ~ ~ = \sum _ { n \in \mathbb { Z } } \mathrm { s i n c } \left[ ( x - x _ { n } ^ { ( \alpha ) } ) \Omega \right] \psi ( x _ { n } ^ { ( \alpha ) } ) . } } & { { \displaystyle ( \mathrm { A 1 0 } ) } } \end{array} \]

Therefore, we see that the function \( \psi \) is determined at any point \( x \in \mathbb { R } \) from its values on one of the lattices \( \{ x _ { n } ^ { ( \alpha ) } \} _ { n } . \).

Also, we obtain an overcomplete resolution of identity,

\[ \frac { \Omega } { \pi } \int _ { \mathbb { R } } d x \ | x ) ( x | = 1 \qquad \qquad \quad ( \mathrm { A 1 1 } ) \]

where \( \pi / \Omega \) is the density of degrees of freedom. We can use the resolution of identity for the continuum basis to show that the space of bandlimited functions has a reproducing kernel,

\[ ( x | \psi ) = \frac { \Omega } { \pi } \int d x ^ { \prime } \; ( x | x ^ { \prime } ) ( x ^ { \prime } | \psi ) \; \; \; \; \; \; \; \; \; \; \; ( \mathrm { A 1 2 } ) \]

\[ \psi ( x ) = \int d x \; K ( x , x ^ { \prime } ) \psi ( x ^ { \prime } ) , \; \; \; \; \; \; \; \; \; \; \; ( \mathrm { A 1 3 } ) \]

where \( K ( x , x ^ { \prime } ) : = ( \Omega / \pi ) ( x | x ^ { \prime } ) = ( \Omega / \pi ) \operatorname { s i n c } [ ( x - x ^ { \prime } ) \Omega ] \).

[1] J. A. Wheeler, “On the nature of quantum geometrodynamics,” Annals of Physics 2 .

[2] C. A. Mead, “Possible Connection Between Gravitation and Fundamental Length,” Phys. Rev. 135 (Aug, 1964) B849–B862.

[3] A. Kempf, G. Mangano, and R. B. Mann, “Hilbert space representation of the minimal length uncertainty relation,” Phys.Rev. D52 (1995) 1108–1118, arXiv:hep-th/9412167 [hep-th].

[4] L. J. Garay, “Quantum gravity and minimum length,” Int.J.Mod.Phys. A10 (1995) 145–166, arXiv:gr-qc/9403008 [gr-qc].

[5] E. Witten, “Reflections on the fate of space-time,” Phys.Today 49N4 (1996) 24–30.

[6] S. Hossenfelder, “Minimal Length Scale Scenarios for Quantum Gravity,” Living Rev. Rel. 16 (2013) 2, arXiv:1203.6191 [gr-qc].

[7] T. Jacobson and R. Parentani, “Horizon entropy,” Found.Phys. 33 (2003) 323–348, arXiv:gr-qc/0302099[gr-qc].

[8] R. D. Sorkin, “On the entropy of the vacuum outside a horizon,” in Tenth International Conference on General Relativity and Gravitation (held Padova, 4-9 July, 1983), Contributed Papers, vol. 2, pp. 734–736. 1983. arXiv:1402.3589 [gr-qc].

[9] L. Bombelli, R. K. Koul, J. Lee, and R. D. Sorkin, “Quantum source of entropy for black holes,” Phys. Rev. D 34 no. 2, (1986) 373–383.

[10] M. Srednicki, “Entropy and area,” Phys. Rev. Lett. 71 (1993) 666–669, arXiv:hep-th/9303048.

[11] S. N. Solodukhin, “Entanglement Entropy of Black Holes,” Living Reviews in Relativity 14 no. 8, (2011) , arXiv:1104.3712 [hep-th].http://www.livingreviews.org/lrr-2011-8.

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# Presentation of Financial Information

This Annual Report on Form 10-K contains financial statements of McGraw-Hill Global Education Intermediate Holdings, LLC. On March 22, 2013, MHE Acquisition, LLC (“AcquisitionCo”), acquired all of the outstanding equity interests of certain subsidiaries of The McGraw-Hill Companies, Inc. (“MHC”) pursuant to the Purchase and Sale Agreement, dated as of November 26, 2012 and as amended on March 4, 2013 (collectively, the “Acquired Business”). As a result of this transaction, investment funds affiliated with Apollo Global Management, LLC (the "Sponsors") acquired 100% of AcquisitionCo. We refer to the purchase of the Acquired Business and the related financing transactions as the “Founding Acquisition.” Following the Founding Acquisition, MHC has been known as McGraw Hill Financial, Inc. See “Business -The Founding Acquisition” for further information on the Founding Acquisition and our resultant corporate structure.

# Use of Non-GAAP Financial Information

We have provided Adjusted Revenue, EBITDA and Adjusted EBITDA and the ratios related thereto in this Annual Report on Form 10-K because we believe they provide investors with additional information to measure our performance. We use Adjusted Revenue as a performance measure because full payment for digital and print solutions is normally collected close to the time of sale whereas revenue from multi-year deliverables is recognized ratably over the term of the customer contract. We believe that the presentation of Adjusted EBITDA is appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future as well as other items. Further, we believe Adjusted EBITDA provides a meaningful measure of operating profitability because we use it for evaluating our business performance and understanding certain significant items.

Adjusted Revenue, EBITDA and Adjusted EBITDA are not presentations made in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), and our use of terms, varies from others in our industry. Adjusted Revenue, EBITDA and Adjusted EBITDA should not be considered as alternatives to revenue, income from continuing operations, income from operations, or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance or cash flows as measures of liquidity. Adjusted Revenue, EBITDA and Adjusted EBITDA have important limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under U.S. GAAP. Further, EBITDA:

• excludes certain tax payments that may represent a reduction in cash available to us;

• does not reflect any cash capital expenditure requirements for assets being depreciated and amortized that may have to be replaced in the future;

• does not reflect changes in, or cash requirements for, our working capital needs; and

• does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness.

In addition, Adjusted EBITDA:

• includes estimated cost savings and operating synergies, including some adjustments not permitted under Article 11 of Regulation S-X;

• does not include one-time expenditures, including costs required to realize the synergies referred to above;

• reflects the net effect of converting deferred revenues (inclusive of deferred royalties) to a cash basis assuming the collection of all receivable balances;

• does not include management fees paid to entities and investment funds affiliated with Apollo Global Management, LLC, which will discontinue upon completion of this offering; and

• does not reflect the impact of earnings or charges resulting from matters that we and the lenders under our senior secured credit facilities may consider not to be indicative of our ongoing operations.

Our definition of Adjusted EBITDA allows us to add back certain non-cash and other charges or costs that are deducted in calculating net income from continuing operations. However, these are expenses that may recur,


vary greatly and can be difficult to predict. They can represent the effect of long-term strategies as opposed to short-term results. In addition, certain of these expenses can represent the reduction of cash that could be used for other corporate purposes.

Because of these limitations, we rely primarily on our U.S. GAAP results and use Adjusted Revenue, EBITDA and Adjusted EBITDA only supplementally. See “Financial Information—Our Key Metrics.”

# Trademarks

This Annual Report on Form 10-K contains references to our trademarks and service marks. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or \( \mathbf { T N } \) symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.


# INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 June 2020

	Notes	As at
30 June
2020	As at
31 December
2019

RMB’000	RMB’000

(Unaudited)	(Audited)

NON-CURRENT ASSETS

Property, lipant and equpment		2,959,444	3,007,789

Investment properties		74	138

Rihfgt-o-use assets		208,098	208,808

Goodwill		18,302	18,302

Other intaniblge assets		403,450	362,933

Investments in associates		824,435	814,504

Investments in joint ventures		2,893,320	2,865,042

Financial assets at fair value throuhfig prot
or loss		622,302	386,035

Deferred tax assets		18,524	19,310

Other non-current assets		1,115,980	813,140

Total non-current assets		9,063,929	8,496,001

CURRENT ASSETS

Inventories		2,300,346	2,333,836

Trade receivables	11	1,144,344	913,808

Debt instruments at fair value throuhg other
comprehensive income	12	240,372	218,362

Amounts due from related parties		18,527	13,673

Prepayments, other receivables and
other assets		438,821	524,569

Financial assets at fair value throuhfig prot
or loss		41,454	12,853

Pledged deposits		555,910	371,826

Cash and cash equivalents		2,207,216	1,328,104

Total current assets		6,946,990	5,717,031


	Notes	As at
30 June
2020	As at
31 December
2019

RMB’000	RMB’000

(Unaudited)	(Audited)

CURRENT LIABILITIES

Interest-bearing bank and other borrowings		2,963,955	1,968,555

Trade and bills payables	13	579,091	558,897

Amounts due to related parties		209,527	290,501

Other payables and accruals		756,912	351,425

Income tax payable		20,448	89,479

Total current liabilities		4,529,933	3,258,857

NET CURRENT ASSETS		2,417,057	2,458,174

TOTAL ASSETS LESS CURRENT
LIABILITIES		11,480,986	10,954,175

NON-CURRENT LIABILITIES

Interest-bearing bank and other borrowings		2,108,048	1,457,103

Convertible bonds		780,423	762,355

Deferred income		56,747	61,324

Deferred tax liabilities		5,016	8,606

Other non-current liabilities		269,203	254,506

Total non-current liabilities		3,219,437	2,543,894

Total liabilities		7,749,370	5,802,751

Net assets		8,261,549	8,410,281

EQUITY

Equity attributable to owners of the
parent

Share cailpta		1,292,825	1,292,601

Equity component of convertible bonds		203,543	205,642

Reserves		6,749,411	6,857,014

		8,245,779	8,355,257

Non-controlling interests		15,770	55,024

Total equity		8,261,549	8,410,281


# II Notes to the Financial Information—continued

(Expressed in thousands of Renminbi, unless otherwise stated)

# 3 SIGNIFICANT ACCOUNTING POLICIES—continued

# (v) Related parties—continued

(k) close family members of key management personnel of the Company’s parent;

(l) other enterprises that are controlled or jointly controlled by the principal individual investors, key management personnel of the Group, and close family members of such individuals; and

(m) a post-employment benefit plan for the benefit of employees of the Group, or of any entity that is a related party of the Group.

# (w) Segment reporting

Reportable segments are identified based on operating segments which are determined based on the structure of the Group’s internal organization, management requirements and internal reporting system. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, whose financial performance are regularly reviewed by the Group’s management to make decisions about resource to be allocated to the segment and assess its performance, and for which financial information regarding financial position, financial performance and cash flows is available.

Two or more operating segments may be aggregated into a single operating segment if the segments have same or similar economic characteristics and are similar in respect of the nature of each products and service, the nature of production processes, the type or class of customers for the products and services, the methods used to distribute the products or provide the services, and the nature of the regulatory environment.

Inter-segment revenues are measured on the basis of actual transaction price for such transactions for segment reporting, and segment accounting policies are consistent with those for the consolidated financial statements.

# (x) Significant accounting estimates andj udgments

The preparation of Financial Information requires management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

# (i) Impairment of available-for-sale financial assets and held-to-maturity investments

In determining whether there is any objective evidence that impairment has occurred on available-for-sale financial assets and held-to-maturity investments, we assess periodically whether there has been a significant or prolonged decline in the fair value of the investments below its cost or carrying amount, or whether other objective evidence of impairment exists based on the investee’s financial conditions and business prospects,