amount of net premium amortization recorded at acquisition due to the early retirement of several issuances of debt during the period, which has the effect of increasing interest expense, and an increase in interest expense on unsecured notes related to the issuance of \$1.0 billion of new debt in April, 2016 in advance of a debt maturity in June, 2016.

# Other Income, Net

Other income, net reflects certain items not directly related to our core operations, including our share of income from partnerships we do not control, interest income, gains and losses from non-operating asset dispositions, foreign currency gains and losses and components of net periodic pension and postretirement benefit costs. Other income (expense), net increased by \$7 million, or 140%, for the year ended December 31, 2017 as compared to the year ended December 31, 2016. This increase in other income, net was primarily due to a reduction in the loss on early retirement of debt, an increase in interest income from the \$6 billion Term Loan B funds held in escrow and income generated from our services agreements with Cyxtera, which was substantially offset by a lower expected return on assets in 2017 for our pension and post-retirement plans. The expected return on assets for our pension and post-retirement plans was lower in 2017 as compared to 2016, which resulted in us recording pension and post-retirement expense in 2017 as compared to recording pension and post-retirement income in 2016. Other income, net decreased by \$44 million, or 90%, for the year ended December 31, 2016 as compared to the year ended December 31, 2015. This decrease in other income, net was primarily due to losses on early retirement of debt, which was partially offset by the impact of nonrecurring funding from a state economic development program.

# Income Tax (Benefits) Expense

The enactment of the Tax Cuts and Jobs Act legislation in December 2017 resulted in a re-measurement of our deferred tax assets and liabilities at the new federal corporate tax rate of 21%. The re-measurement resulted in a tax benefit of approximately \$1.1 billion recorded in the fourth quarter of 2017, which was the predominant factor contributing to our recognition of an \$849 million income tax benefit for 2017, versus income tax expense of \$394 million in the prior year. Income tax expense decreased by \$44 million for the year ended December 31, 2016 as compared to the year ended December 31, 2015. For the years ended December 31, 2017, 2016 and 2015, our effective income tax rate was (157.2)%, 38.6% and 33.3%, respectively. The effective tax rate for the year ended December 31, 2017 reflects the benefit from the re-measurement of deferred taxes as noted above, a\$27 million tax expense related to the sale of our data centers and colocation business and a \$32 million tax impact of non-deductible transaction costs related to the Level 3 acquisition. The effective tax rate for the year ended December 31, 2016 reflects a tax impact of \$18 million from an intercompany dividend payment from one of our foreign subsidiaries to its domestic parent company that was made as part of our corporate restructuring in preparation for the sale of our colocation business. The effective tax rate for the year ended December 31, 2015 reflects a tax benefit of approximately \$34 million related to affiliate debt rationalization, research and development tax credits of \$28 million for 2011 through 2015, and a \$16 million tax decrease due to changes in state taxes caused by apportionment changes, state tax rate changes and the changes in the expected utilization of net operating loss carryforwards (“NOLs”). See Note 13—Income Taxes to our consolidated financial statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2017 and “Critical Accounting Policies and Estimates—Income Taxes” below for additional information.


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

“Tongwen Education”	 Guangzhou Tongwen Education Investment Group Co.,
*Ltd. (廣州同文教育投資集團有限公司), a limited liability
company established under the laws of the PRC on July 7,
2015 which is owned as to 44.5% by Ms. He Huifen, 12.75%
by Mr. Han Liing, 24% by Ms. Zhou Lanid8qqng an 1.75%
by Ms. He Huifang

“Tongwen Investment”	 Guangzhou Lingnan Tongwen Education Investment
Management Co., Ltd.* (廣州嶺南同文教育投資管理有限公
司), a limited liability company established under the laws
of the PRC on January 21, 2014 which is owned as to 80.0%
by Tongwen Education and 20.0% by Zhuhai Yixing Equity
Investment Partnership (Limited Partnership)* (珠海易興股
權投資合夥企業(有限合夥))

“Track Record Period”	 the three years ended December 31, 2018, 2019, and 2020

“Underwriters”	 the Hong Kong Underwriters and the International
Underwriters

“Underwriting Agreements”	 the Hong Kong Underwriting Agreement and the
International Underwriting Agreement

“U.S.” or “United States”	 the United States of America, its territories, its possessions
and all areas subject to itsj urisdiction

“U.S. dollar(s)” or “US$” or
“USD”	United States dollars, the lawful currency for the time being
of the United States

“U.S. Securities Act”	 the U.S. Securities Act of 1933, as amended from time to
time, and the rules and regulations promulgated thereunder

“VAT”	 value-added tax

“WHITE Aliippcaton Form(s)”	 the alifppcation orm(s) for use by the public who require(s)
such Hong Kong Offer Shares to be issued in the alippcants’
own names

“YELLOW Aliippcaton Form(s)”	 the form of aliippcaton for the HonKg ong Offer Shares for
use by the public who require such Hong Kong Offer Shares
to be deposited directly into CCASS


“Zhihui Guang”	Zhihui Guang Limited, a limited liability company
incorporated under the laws of the BVI on August 9, 2018
and is owned by Mr. He Huishan as to 51% and by Ms. Zhou
Laning as to 49%, and is one of our Controlliqng
Shareholders

“%”	per cent

Certain amounts and percentage figures included in this prospectus have been subject lo rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding them.

In this prospectus, unless otherwise stated, certain amounts denominated in Renminbi have been translated into Hong Kong dollars or U.S. dollars at an exchange rate of RMB0.8315 =HK\$1.00 or RMB6.4546 = US\$1.00, respectively, for illustration purpose only. Such conversions shall not be construed as representations that amounts in Renminbi were or could have been or could be converted into Hong Kong dollars or U.S. dollars at such rates or any other exchange rates on such date or any other date.

If there is any inconsistency between the Chinese names of entities or enterprises established in the PRC and their English translations, the Chinese names shall prevail. The English translation of company or entity names in Chinese or another language which are marked with “\*” and the Chinese translation of company or entity names in English which are marked with “\*” is for identification purpose only.

Unless otherwise specified, all relevant information in this prospectus assumes no exercise of the Over-allotment Option.


# 37 SUBSIDIARIES AND CONTROLLED STRUCTURED ENTITY (continued)

Name of entity	Place and date of
incorporation
and kind of
legal entity	Principal
activities and
place of operation	Particulars
of issued
share capital	Effective interest
held as at
31 December

2020	2019

Xinjiang Jinchuan Jiahua
 Automobile Service Co., Ltd.	The PRC,
20 March 2019,
limited liabilit*y company	Transaction services,
the PRC	RMB5,000,000	100%	100%

Shanghai Zengxin Information
 Technology Co., Ltd.	The PRC,
25 April 2019,
limited liabilit#y company	Technology
development,
the PRC	RMB500,000,000	100%	100%

Guangdong Haihan Technology
 Development Co., Ltd	The PRC,
8 November 2019,
limited liabilit#y company	Information
technology,
the PRC	RMB102,200,000	100%	100%

Guangzhou Shengda Financing
 Guarantee Company Limited	The PRC,
12 November, 2019,
limited liability company	Financial services,
the PRC	RMB100,170,000	100%	100%

Hainan Xinye Information
 Technology Co., Ltd.	The PRC,
21 April, 2020,
limited liabilit#y company	Information
technology,
the PRC	RMB10,000,000	100%	–

Yunnan Juliying enterprise
 management Co., Ltd.	The PRC,
10 October 2020,
limited liabilit#y company	Financial services,
the PRC	RMB20,000,000	100%	–

Xinjiang Wanhong Information
 Technology Co., Ltd.	The PRC,
15 September 2020,
limited liabilit#y company	Information
technology,
the PRC	RMB20,000,000	100%	–

Xinjiang Wanyi Information
 Technology Co., Ltd.	The PRC,
15 September 2020,
limited liabilit#y company	Information
technology,
the PRC	RMB20,000,000	100%	–

Tianjin Duoxin Financing
 Guarantee Company Limited	The PRC,
18 September 2020,
limited liabilit#y company	Financial services,
the PRC	RMB300,000,000	100%	–

Beijing Xinshu Information
 Technology Co., Ltd.	The PRC,
22 September 2020
limited liabilit#y company	Information
technology,
the PRC	RMB3,000,000	100%	–


# 37 SUBSIDIARIES AND CONTROLLED STRUCTURED ENTITY (continued)

Name of entity	Place and date of
incorporation
and kind of
legal entity	Principal
activities and
place of operation	Particulars
of issued
share capital	Effective interest
held as at
31 December

2020	2019

Yixin Hong Kong Investment limited	Hong Kong,
25 November 2020,
limited liability company	Investment holding,
Hong Kong	HK$1	100%	–

Ruige Capital Management
 Co., Ltd.	The PRC,
23 December 2020,
limited liabilit#y company	Investment holding,
the PRC	US$100,000,000	100%	–

Beijing Yixin Information
 Technology Co., Ltd.	The PRC,
9 January 2015,
limited liabili^ty company	Advertising and
subscription services,
the PRC	RMB50,000,000	100%	100%

Remarks:

\# Registered as wholly foreign owned enterprises under PRC law

\* Registered as sino- foreign equity joint venture under PRC law

^ Controlled by New Contractual Arrangements


all purposes. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural and vice versa. The use herein of the word “including” following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation,” “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter.

Section 6.3 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.

Section 6.4 No Third Party Rights. The provisions of this Agreement are intended to bind the Parties as to each other and are not intended to and do not create rights in any other person or confer upon any other person any benefits, rights or remedies, and no person is or is intended to be a third party beneficiary of any of the provisions of this Agreement.

Section 6.5 Counterparts. This Agreement may be executed in any number of counterparts (including facsimile or .pdf copies) with the same effect as if all Parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument.

Section 6.6 Applicable Law; Forum, Venue and Jurisdiction. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas, without regard to the principles of conflicts of law. Each of the Parties (a) irrevocably agrees that any claims, suits, actions or proceedings arising out of or relating in any way to this Agreement shall be exclusively brought in any federal court of competent jurisdiction situated in the United States District Court for the Western District of Texas, San Antonio Division, or if such federal court declines to exercise or does not have jurisdiction, in the district court of Bexar County, Texas, in each case regardless of whether such claims, suits, actions or proceedings sound in contract, tort, fraud or otherwise, are based on common law, statutory, equitable, legal or other grounds, or are derivative or direct claims, (b) irrevocably submits to the exclusive jurisdiction of the United States District Court for the Western District of Texas, San Antonio Division, or if such federal court declines to exercise or does not have jurisdiction, of the district court of Bexar County, Texas in connection with any such claim, suit, action or proceeding, (c) agrees not to, and waives any right to, assert in any such claim, suit, action or proceeding that (i) it is not personally subject to the jurisdiction of the United States District Court for the Western District of Texas, San Antonio Division, or the district court of Bexar County, Texas, or of any other court to which proceedings in such courts may be appealed, (ii) such claim, suit, action or proceeding is brought in an inconvenient forum, or (iii) the venue of such claim, suit, action or proceeding is improper, (d) expressly waives any requirement for the posting of a bond by a party bringing such claim, suit, action or proceeding and (e) consents to process being served in any such claim, suit, action or proceeding by mailing, certified mail, return receipt requested, a copy thereof to such party at the address in effect for notices hereunder or by personal service within or without the State of Texas, and agrees that service in such forms shall constitute


good and sufficient service of process and notice thereof; provided, however, that nothing in clause (e) hereof shall affect or limit any right to serve process in any other manner permitted by law.

Section 6.7 Severability. If any of the provisions of this Agreement are held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any political body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate the entire Agreement. Instead, this Agreement shall be construed as if it did not contain the particular provision or provisions held to be invalid and an equitable adjustment shall be made and necessary provision added so as to give effect to the intention of the Parties as expressed in this Agreement at the time of execution of this Agreement.

Section 6.8 Amendment or Modification. This Agreement may be amended or modified from time to time only by the written agreement of all the Parties. Each such instrument shall be reduced to writing and shall be designated on its face as an amendment to this Agreement. Notwithstanding anything in the foregoing to the contrary, any amendment executed by the Partnership or any of its subsidiaries shall not be effective unless and until the execution of such amendment has been approved by the Conflicts Committee.

Section 6.9 Integration. This Agreement, together with the Schedules and Exhibits referenced herein, constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings of the Parties in connection therewith.

Section 6.10 Specific Performance. The Parties agree that money damages may not be a sufficient remedy for any breach of this Agreement and that in addition to any other remedy available at law or equity, the Parties shall be entitled to seek specific performance and injunctive or other equitable relief as a remedy for any Party’s breach of this Agreement. The Parties agree that no bond shall be required for any injunctive relief in connection with a breach of this Agreement.

Section 6.11 Deed; Bill of Sale; Assignment. To the extent required and permitted by applicable law, this Agreement shall also constitute a “deed,” “bill of sale” or “assignment” of the Assets and interests referenced herein. For the avoidance of doubt, the conveyance of the Assets from TRMC, the General Partner or the Partnership to the General Partner, the Partnership or the Operating Company, all as applicable, is not intended to be treated as a sale for tax or any other purposes.


“BLT Burger”	 BLT BURGER (HK) LIMITED, a company incorporated in Hong
Kong with limited liability on 27 July 2009 and a direct wholly-
owned subsidiary of Dining Concepts (Western)

“BLT Burger (Harbour City)”	 BLT Burger, a Western style restaurant operating under BLT
Burger which is situated at Shop OT 301–  OT 301A, Level 3,
Ocean Terminal, Harbour City

“BLT Burger (Times Square)”	 BLT Burger, a Western style restaurant operating under Wealthy
Home which is situated at Shop B224A, Basement 2, Times
Square, Causeway Bay, Hong Kong

“BLT Restaurants”	 BLT RESTAURANTS (HK) LIMITED, a company incorporated in
Hong Kong with limited liability on 10 September 2008 and a
direct wholly-owned subsidiary of Dining Concepts (Western)

“BLT Steak”	 BLT Steak, a Western style restaurant operating under BLT
Restaurants which is situated at Shop OT G62, Ground Floor,
Ocean Terminal, Harbour City

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

“Bombay Dreams”	 Bombay Dreams, an Asian style restaurant operating under
Bombay Dreams (HK) which is situated at Flats A and B, 4th
Floor, Carfield Commercial Building, 75 and 77 Wyndham Street,
Central, Hong Kong

“Bombay Dreams (HK)”	 BOMBAY DREAMS (HK) LIMITED (formerly known as
“WAITERS ON WHEELS LIMITED” and “CUISINE COURIER
LIMITED”, respectively), a company incorporated in Hong Kong
with limited liability on 26 July 2002 and a direct wholly-owned
subsidiary of Dining Concepts (Asian)

“Bombay Dreams To Go” or
“takeaway outlet”	the takeaway outlet with supporting kitchen for takeaway food
orders and outdoor catering services for Bombay Dreams,
operating under Bombay Dreams (HK) which is situated at Shop
1, Ground Floor and store, Mezzanine Floor, Po Thai Building, 9
Possession Street, Hong Kong

“Bouchon”	 Bouchon Bistro Francais (formerly known as “Bizou Bistro” and
“Ocean Grill”), a Western style restaurant operating under Excel
Team which is situated at Flat D, Ground Floor, 49, 49A, 49B
and 49C Elgin Street, Central, Hong Kong

“Braza”	 Braza Churrascaria Brazilian Steakhouse (formerly known as
“Mayta Peruvian Kitchen & Pisco Bar”), a Western style
restaurant operating under BBQ Restaurants which is situated at
Units A, B and C, 3rd Floor, Grand Progress Building, 58, 60 and
62 D’Aguilar Street, 15 and 16 Lan Kwai Fong, Central, Hong
Kong


“Bread Street Kitchen”	 Bread Street Kitchen, a Western style restaurant operating under
Pine Best which is situated at Mezzanine Floor, LKF Tower,
33 Wyndham Street and 55 D’Aguilar Street, Central, Hong Kong

“breakeven point”	 accounting breakeven, which refers to the number of month(s)
since the commencement of business of the restaurant at which
the monthly revenue is at least equal to the monthly expenses,
taking into account the non-cash items such as depreciation and
amortisation expenses

“BRU Beer & Bite”	 BRU Beer & Bite, a Western style restaurant expected to be
opened in the year ending 31 March 2018, expected to be
operated under New Era which will be situated at Shop 06-G03,
Ground Floor, Block C Dormitory, Central Police Station,
10 Hollywood Road, Central, Hong Kong

“Buildings Department”	 Buildings Department of the Hong Kong Government

“business day(s)”	 a day which is not a Saturday, Sunday or public holiday in Hong
Kong and on which banks in Hong Kong are generally open for
normal banking business to the public

“Business Registration
Ordinance”	Business Registration Ordinance (Chapter 310 of the Laws of
Hong Kong), as amended, supplemented or otherwise modified
from time to time

“BVI”	 the British Virgin Islands

“CAGR”	 compound annual growth rate

“California Vintage”	 California Vintage, a Western style restaurant operated under
California Vintage (HK) which was situated at Shop B, Ground
Floor, Carfield Commercial Building, 75 and 77 Wyndham Street,
Central, Hong Kong. California Vintage was closed on 6 March
2016

“California Vintage (HK)”	 CALIFORNIA VINTAGE LIMITED, a company incorporated in
Hong Kong with limited liability on 28 June 2010 and a direct
wholly-owned subsidiary of Dining Concepts (Western)

“Capitalisation Issue”	 the issue of 658,900,165 Shares to be made upon capitalisation
of part of the amount standing to the credit of the share premium
account of our Company as referred to in the section headed
“Further information about our Company—  Written resolutions of
our Shareholders passed on 14 July 2016” in Appendix IV to this
prospectus

“Cayman Islands Share
Registrar”	Estera Trust (Cayman) Limited, the Cayman Islands share
registrar of our Company


with both gauge and reducibility parameters displayed in (6), (8), and (11), together with their corresponding antifields (denoted by star variables)

\[ \Phi ^ { \alpha _ { 0 } } \equiv \bigl \{ \varphi , A _ { \mu } , H ^ { \mu } , B ^ { \mu \nu } , \phi ^ { A } \bigr \} , \quad \Phi _ { \alpha _ { 0 } } ^ { * } \equiv \bigl \{ \varphi ^ { * } , A ^ { * \mu } , H _ { \mu } ^ { * } , B _ { \mu \nu } ^ { * } , \phi _ { A } ^ { * } \bigr \} , \quad ( 1 4 ) \]

\[ \Omega ^ { \alpha _ { 1 } } \to \eta ^ { \alpha _ { 1 } } \equiv \{ \eta , C ^ { \mu \nu } , \eta ^ { \mu \nu \rho } \} , \qquad \qquad \eta _ { \alpha _ { 1 } } ^ { \ast } \equiv \{ \eta ^ { \ast } , C _ { \mu \nu } ^ { \ast } , \eta _ { \mu \nu \rho } ^ { \ast } \} , \qquad \qquad ( 1 5 ) \]

\[ \Omega ^ { \alpha _ { 2 } } \rightarrow \eta ^ { \alpha _ { 2 } } \equiv \{ C ^ { \mu \nu \rho } , \eta ^ { \lambda \mu \nu \rho } \} , \qquad \qquad \eta _ { \alpha _ { 2 } } ^ { * } \equiv \{ C _ { \mu \nu \rho } ^ { * } , \eta _ { \lambda \mu \nu \rho } ^ { * } \} , \qquad \qquad ( 1 6 ) \]

\[ \Omega ^ { \alpha _ { 3 } } \rightarrow \eta ^ { \alpha _ { 3 } } \equiv \{ C ^ { \lambda \mu \nu \rho } \} , \eqno ( 1 7 ) \]

For notational ease, it is convenient to organize the fields/ghosts and respectively antifields into

\[ \chi ^ { \Delta } \equiv \{ \Phi ^ { \alpha _ { 0 } } , \eta ^ { \alpha _ { 1 } } , \eta ^ { \alpha _ { 2 } } , \eta ^ { \alpha _ { 3 } } \} , \qquad \chi _ { \Delta } ^ { * } \equiv \{ \Phi _ { \alpha _ { 0 } } ^ { * } , \eta _ { \alpha _ { 1 } } ^ { * } , \eta _ { \alpha _ { 2 } } ^ { * } , \eta _ { \alpha _ { 3 } } ^ { * } \} . \qquad \qquad ( 1 8 ) \]

The \( \mathbb { Z } _ { 2 } \) grading of the BRST algebra in terms of the Grassmann parity (\( \succ \)) is inferred from the observation that all the original fields together with the accompanying gauge and reducibility parameters are bosonic, so, according to the general rules of the antifield formalism, we take

\[ \varepsilon ( \eta ^ { \alpha _ { k } } ) = k \bmod 2 , \quad k = 1 , 2 , 3 , \quad \quad \varepsilon ( \chi _ { \Delta } ^ { * } ) = ( \varepsilon ( \chi ^ { \Delta } ) + 1 ) \bmod 2 . \quad \quad ( 1 9 ) \]

The Grassmann parity is then lifted to the BRST algebra by means of its additive action modulo 2 against multiplication. In agreement with the usual prescriptions of the BRST method, the BRST algebra is endowed with three more gradings (correlated with the main derivatives/differentials acting on this algebra): two N-gradings along the antifield number agh and respectively the pure ghost number pgh and a total Z-grading in terms of the ghost number gh. These are instated by setting the values of the corresponding degrees at the level of the BRST generators

\[ \mathrm { a g h } ( \chi ^ { \Delta } ) = 0 , \ \ \ \ \mathrm { a g h } ( \Phi _ { \alpha _ { 0 } } ^ { * } ) = 1 , \ \ \ \ \mathrm { a g h } ( \eta _ { \alpha _ { k } } ^ { * } ) = k + 1 , \ \ \ \ k = 1 , 2 , 3 , \ \ \ \ ( 2 0 ) \]

\[ \mathrm { p g h } ( \chi _ { \Delta } ^ { * } ) = 0 , \; \; \; \; \mathrm { p g h } ( \Phi ^ { \alpha _ { 0 } } ) = 0 , \; \; \; \; \mathrm { p g h } ( \eta ^ { \alpha _ { k } } ) = k , \; \; \; \; \; \; \; \; \; \; k = 1 , 2 , 3 , \; \; \; \; ( 2 1 ) \]

and by further using their additive behaviour with respect to multiplica-tion. Finally, the (total) ghost number of any object with definite pure ghost and antifield numbers is defined like \( \mathrm { g h } ( a ) = \mathrm { p g h } ( a ) - \mathrm { a g h } ( a ) \).

Due to the fact that the right-hand sides of both gauge transformations (3)–(5) and relations (7) and (10) do not depend on the fields \( \Phi ^ { \alpha _ { 0 } } \) (or, in other words, all gauge generators and reducibility functions — of order one


and respectively two — are field independent), it follows that the BRST differential s reduces to a sum of two fermionic derivations

\[ s = \delta + \gamma , \eqno ( 2 2 ) \]

with \( \delta \) the Koszul–Tate differential, graded in terms of agh \( ( \mathrm { a g h } ( \delta ) = - 1 \)),and \( \gamma \) the longitudinal exterior derivative (in this case a true differential), graded by pgh \( ( \mathrm { p g h } ( \gamma ) \) = 1). These two degrees do not interfere \( ( \mathrm { a g h } ( \gamma ) \) = 0,\( \mathrm { p g h } ( \delta ) \) = 0), such that the total degree of the BRST differential (and of each of its components), namely gh, becomes equal to 1:\( \operatorname { g h } ( s ) = \operatorname { g h } ( \delta ) = \operatorname { g h } ( \gamma ) = \) 1. One of the major requirements of the BRST setting, namely the second-order nilpotency of s, becomes equivalent to three separate equations

\[ s ^ { 2 } = 0 \Leftrightarrow ( \delta ^ { 2 } = 0 , \, \delta \gamma + \gamma \delta = 0 , \, \gamma ^ { 2 } = 0 ) , \eqno ( 2 3 ) \]

which confirms that \( \gamma \) can indeed be constructed as a true differential in the case of the free model under study. The actions of \( \delta \) and \( \gamma \) on the BRST generators that enforce (23) as well as the fundamental cohomological requirements of the antifield BRST theory [27, 28, 29, 30, 31, 32] are given by

\[ \delta \chi ^ { \Delta } = 0 , \qquad \qquad \qquad \delta \varphi ^ { * } = \partial _ { \lambda } H ^ { \lambda } , \qquad \qquad \delta A ^ { * \mu } = \partial _ { \lambda } B ^ { \lambda \mu } , \qquad \qquad ( 2 4 ) \]

\[ \begin{array} { r } { \delta H _ { \mu } ^ { * } = - \partial _ { \mu } \varphi , \qquad \qquad \delta B _ { \mu \nu } ^ { * } = - \frac 1 2 \partial _ { [ \mu } A _ { \nu ] } , \qquad \quad \delta \phi _ { A } ^ { * } = k _ { A B } \sqcap \phi ^ { B } , \qquad ( 2 5 ) } \end{array} \]

\[ \delta \eta ^ { * } = - \partial _ { \lambda } A ^ { * \lambda } , \qquad \quad \delta C _ { \mu \nu } ^ { * } = \partial _ { [ \mu } H _ { \nu ] } ^ { * } , \qquad \qquad \delta \eta _ { \mu \nu \rho } ^ { * } = \partial _ { [ \mu } B _ { \nu \rho ] } ^ { * } , \qquad ( 2 6 ) \]

\[ \delta C _ { \mu \nu \rho } ^ { * } = - \partial _ { [ \mu } C _ { \nu \rho ] } ^ { * } , \qquad \delta \eta _ { \lambda \mu \nu \rho } ^ { * } = - \partial _ { [ \lambda } \eta _ { \mu \nu \rho ] } ^ { * } , \qquad \delta C _ { \lambda \mu \nu \rho } ^ { * } = \partial _ { [ \lambda } C _ { \mu \nu \rho ] } ^ { * } , \qquad ( 2 7 ) \]

\[ \gamma \chi _ { \Delta } ^ { * } = 0 , \qquad \qquad \qquad \gamma \varphi = 0 , \qquad \qquad \qquad \gamma A _ { \mu } = \partial _ { \mu } \eta , \qquad \qquad ( 2 8 ) \]

\[ \gamma H ^ { \mu } = - 2 \partial _ { \lambda } C ^ { \lambda \mu } , \qquad \gamma B ^ { \mu \nu } = - 3 \partial _ { \lambda } \eta ^ { \lambda \mu \nu } , \qquad \gamma \phi ^ { A } = 0 , \qquad \qquad ( 2 9 ) \]

\[ \gamma \eta = 0 , \qquad \qquad \qquad \gamma C ^ { \mu \nu } = - 3 \partial _ { \lambda } C ^ { \lambda \mu \nu } , \: \: \: \: \: \gamma \eta ^ { \mu \nu \rho } = - 4 \partial _ { \lambda } \eta ^ { \lambda \mu \nu \rho } , \: \: \: \: ( 3 0 ) \]

\[ \gamma C ^ { \mu \nu \rho } = - 4 \partial _ { \lambda } C ^ { \lambda \mu \nu \rho } , \quad \gamma \eta ^ { \lambda \mu \nu \rho } = 0 , \qquad \qquad \gamma C ^ { \lambda \mu \nu \rho } = 0 , \qquad \qquad ( 3 1 ) \]

where both operators are assumed to act like right derivations and \( \sqsupset \equiv \)\( \partial _ { \mu } \partial ^ { \mu } \) symbolizes the d’Alembertian. We notice that the actions of \( \gamma \) on all fields/ghosts can be obtained in this particular situation simply by replacing all gauge or reducibility parameters from the right-hand sides of relations (3)–(5), (7), (10), and (13) with the corresponding ghosts introduced in (15)–(17).

A striking feature of the antifield approach, in spite of its essentially La-grangian origins, resides in the (anti)canonical action of the BRST differen-tial [23, 24, 25, 26, 27, 28, 29, 30, 31, 32], \( s \cdot = ( \cdot , S ) \), where its (anti)canonical


# ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Item 10 will be incorporated by reference pursuant to Regulation 14A under the Exchange Act. The Registrant expects to file an amended Form 10-K with the SEC within 120 days after the close of the year ended December 31, 2016.

# ITEM 11. EXECUTIVE COMPENSATION

Item 11 will be incorporated by reference pursuant to Regulation 14A under the Exchange Act. The Registrant expects to file an amended Form 10-K with the SEC within 120 days after the close of the year ended December 31, 2016.

# ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Item 12 will be incorporated by reference pursuant to Regulation 14A under the Exchange Act. The Registrant expects to file an amended Form 10-K with the SEC within 120 days after the close of the year ended December 31, 2016.

# ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Item 13 will be incorporated by reference pursuant to Regulation 14A under the Exchange Act. The Registrant expects to file an amended Form 10-K with the SEC within 120 days after the close of the year ended December 31, 2016.

# ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Item 14 will be incorporated by reference pursuant to Regulation 14A under the Exchange Act. The Registrant expects to file an amended Form 10-K with the SEC within 120 days after the close of the year ended December 31, 2016.

# PART IV

# ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

# (a) The following documents are filed as a part of this report:

# Financial statements

The following consolidated financial statements are included in “Part II—Item 8. Financial Statements and Supplementary Data” of this Annual Report:

	Page

Report of Independent ReiPbligstered uc Accountinig Frm	97

Consolidated Statements of Operations	98

Consolidated Balance Sheets	99


Consolidated Statements of Members’ Equity (Deficit)	100

Consolidated Statements of Cash Flows	101

Notes to Consolidated Financial Statements	103

Sulppemental Financial Information

Sulppemental Selected QuarterlFy inancial Information (Unaudited)	133

Sulppemental Oil and Natural Gas Information	134

141

# (b) Exhibits

The following exhibits are incorporated by reference into the filing indicated or are filed herewith.

Exhibit No.	Exhibit Title	Incorporated by Reference to the Following

2.1*	Purchase Agreement and Plan of Merger, dated as of
April 20, 2015, by and among Vanguard Natural
Resources, LLC, Lihgthouse Merger Sub, LLC,
Lime Rock Management LP, Lime Rock Resources
A, L.P., Lime Rock Resources B, L.P., Lime Rock
Resources C, L.P., Lime Rock Resources II-A, L.P.,
Lime Rock Resources II-C, L.P., LRR Energy, L.P.
and LRE GP, LLC	Exhibit 2.1 to Form 8-K, filed April 22, 2015 by
LRR Energy, L.P. (File No. 001-33016)

2.2*	Agreement and Plan of Merger, dated as of May 21,
2015, by and among Vanguard Natural Resources,
LLC, Talon Merger Sub, LLC, Eale Rgock Energy
Partners, L.P. and Ealge Rock Energy GP, L.P.	Exhibit 2.1 to Form 8-K, filed May 22, 2015 by
Ealge Rock Energy Partners, L.P. (File No. 001-
35344)

2.3	Purchase and Sale Agreement, dated March 29,
2016, among Vanguard Operating, LLC, NonOp
Solutions III, L.P. and NonOp Solutions IV LP.	Exhibit 2.1 to Form 8-K, filed March 30, 2016
(File No. 001-33756)

3.1	Fifth Amended and Restated Limited Liability
Company Agreement of Vanguard Natural
Resources, LLC	Exhibit 3.1 to Form 8-K, filed September 15,
2014 (File No. 001-33756)

4.1	Indenture, dated as of April 4, 2012, among
Vanguard Natural Resources, LLC and VNR
Finance Corp., as issuers, the Subsidiary Guarantors
named therein, as guarantors, and U.S. Bank
National Association, as trustee	Exhibit 4.1 to Form 8-K, filed April 4, 2012 (File
No. 001-33756)

4.2	First SulIdppemental nenture, dated as of Ail4pr ,
2012, among Vanguard Natural Resources, LLC and
VNR Finance Corp., as issuers, the Subsidiary
Guarantors named therein, as guarantors, and
U.S. Bank National Association, as trustee	Exhibit 4.2 to Form 8-K, filed April 4, 2012 (File
No. 001-33756)

4.3	Second SulIdppemental nenture, dated as of
December 9, 2015, among Vanguard Natural	Exhibit 4.3 to Form 10-K, filed March 7, 2016
(File No. 001-33756)


# AWARDS AND RECOGNITIONS

We have received numerous awards recognizing our achievements in various aspects of our business and service offerings. The following table sets forth some of the awards and accolades we have received:

Year	Awarded
Entit/Idiynvidual	 Award/Accreditation	Awarding
Organization

2017-
2019. . .	Greentown
Management	China’s Leading
Enterprise in Real
Estate Project
Management
Operation (2017-
2019年中國房地產代
建運營優秀企業)	China Real Estate Top
10 Research Team
(中國房地產To 10
p研究組)

2018-
2019. . .	Greentown
Management	Annual Influential
Business Model
Award (年度影響力
商業模式大獎)	Guandian Real Estate
New Media Co.,
Ltd. (觀點地產新媒
體)

2017-
2019. . .	Greentown
Management	Annual CSR
Contribution Award
(年度CSR貢獻獎)	Economic Observer
Newspaper (經濟觀
察報)

2018 . . . .	 Yiwu and Hejuyuan
Projects (義烏和聚園
項目)	Civil EniZgneerinhg an
TianGyou old Award
for Outstanding
Residential
Community in China
(中國土木工程詹天
佑獎優秀住宅小區金
獎)	China Civil
Eniigneerng Society
(中國土木工程學會)

2017 ....	Greentown
Management	Business Model Award
in the PRC Real
Estate Industry (中國
房地產商業模式年度
大獎)	Guandian Real Estate
New Media Co.,
Ltd. (觀點地產新媒
體)

Greentown
Management	China’s Value-Growth
Leading Real Estate
Company (中國房地
產成長價值領軍企
業)	Guandian Real Estate
New Media Co.,
Ltd. (觀點地產新媒
體)

Yiwu Anhu Home
Project (義烏安福家
園項目)	Energy-saving and
environmentally
friendly residential
property showcase
project (節能環保型
住宅國家康居示範工
程)	Ministry of Housing
and Urban-Rural
Housing
Industrialization
Center (國家住建部
住宅產業化中心)


Year	Awarded
Entit/Idiynvidual	 Award/Accreditation	Awarding
Organization

	Yiwu Beiyuan and
Juyuan Project (義烏
北苑和聚園項目)	Energy-saving and
environmentally
friendly residential
property showcase
project (節能環保型
住宅國家康居示範工
程)	Ministry of Housing
and Urban-Rural
Housing
Industrialization
Center (國家住建部
住宅產業化中心)

2013-
2014. . .	Nanjing public housing
(南京岱山保障房項
目)	Guangsha Award (廣廈
獎)	The PRC government
at national level (中
國房地產業協會/住
房和城鄉建設部住宅
產業化促進中心)

2013 ....	Qiandaohu Pearl Plaza
(千島湖珍珠廣場)	4th China Artistic
Environment Gold
Award (第四屆中國
環境藝術金獎)	Architectural Society
of China (中國建設
文化藝術協會/環境
藝術專業委員會)

# PROPERTIES

# Owned Properties

As of the Latest Practicable Date, we owned a total of 31 properties in Hangzhou, the PRC, with an aggregated floor area of approximately 5,035 sq.m., which we use as our office. As of the same date, we also owned 25 properties located in Hangzhou, Shengzhou, Huzhou and Ningbo, the PRC, with an aggregated floor area of approximately 2,481 sq.m., for which we held as investment properties. Our PRC Legal Advisors have confirmed that we have obtained the real estate ownership certificates for these properties. The following table sets forth details of our owned properties:

No.	Description/Location	Gross Site Area

		(sq.m.)

1. . .	 Room 701, Block 3, Xixi International Business Center,
Xihu district, Hangzhou	294.87

2. . .	 Room 702, Block 3, Xixi International Business Center,
Xihu district, Hangzhou	147.91

3. . .	 Room 703, Block 3, Xixi International Business Center,
Xihu district, Hangzhou	242.42

4. . .	 Room 704, Block 3, Xixi International Business Center,
Xihu district, Hangzhou	248.45

5. . .	 Room 705, Block 3, Xixi International Business Center,
Xihu district, Hangzhou	60.78


# EXECUTIVE SESSIONS OF NON-MANAGEMENT DIRECTORS

Valley’s Corporate Governance Guidelines require the Board to hold separate executive sessions for both independent and non-management directors. The Board holds an executive session at least twice a year with only independent directors and regularly holds an executive session with only non-management directors. In each instance the Lead Director is the presiding director for the session.

# SHAREHOLDER AND INTERESTED PARTIES COMMUNICATIONS WITH DIRECTORS

The Board of Directors has established the following procedures for shareholder or interested party communications with the Board of Directors or with the Lead Director of the Board:

• Shareholders or interested parties wishing to communicate with the Board of Directors, the non-management or independent directors, or with the Lead Director should send any communication to Valley National Bancorp, c/o Alan D. Eskow, Corporate Secretary, at 1455 Valley Road, Wayne, NJ 07470. Any such communication should state the number of shares owned by the shareholder.

• The Corporate Secretary will forward such communication to the Board of Directors or, as appropriate, to the particular committee chairman or to the Lead Director, unless the communication is a personal or similar grievance, a shareholder proposal or related communication, an abusive or inappropriate communication, or a communication not related to the duties or responsibilities of the Board of Directors in which case the Corporate Secretary has the authority to determine the appropriate disposition of the communication. All such communications will be kept confidential to the extent possible.

• The Corporate Secretary will maintain a log and copies of all such communications for inspection and review by any Board member or by the Lead Director, and will regularly review all such communications with the Board or the appropriate committee chairman or with the Lead Director at the next meeting.

# COMMITTEES OF THE BOARD OF DIRECTORS;BOARD OF DIRECTORS MEETINGS

In 2017, the Board of Directors maintained an Audit Committee, a Nominating and Corporate Governance Committee, and a Compensation and Human Resources Committee. Only independent directors serve on these committees. In addition to these committees, the Company and the Bank also maintain a number of committees to oversee other areas of Valley’s operations. These include an Executive Committee, Community Reinvestment Act ("CRA") Committee, Investment Committee, Pension/Savings & Investment Trustees Committee, Risk Committee, Strategic Planning Committee and a Trust Committee, all of which have both independent and non-independent directors, as permitted by the SEC and the NYSE.

Each director attended at least 76% or more of the meetings of the Board of Directors and of each committee on which he or she served for the year ended December 31, 2017. Our Board met 10 times during 2017 and the Bank’s Board met 10 times during 2017.

The following table presents 2017 membership information for each of our Audit, Nominating and Corporate Governance, and Compensation and Human Resources Committees.

Name	Audit	Nominating
and
Corporate
Governance	Compensation
and
Human
Resources

Andrew B. Abramson	X	X	X

Peter J. Baum	X	X

Pamela R. Bronander			X

Eric P. Edelstein	(Chair)	X	X

Gerald Korde	X	X	(Chair)

Michael L. LaRusso	X		X

Marc J. Lenner		(Chair)	X

Suresh L. Sani	X	X	X

Jeffrey S. Wilks	X	X

2017 Number of
M*eetings	5	7	6

\* Includes telephonic meetings.

AUDIT COMMITTEE. The Audit Committee formally met 5 times during 2017. In addition, the Committee Chairman and Risk Committee Chairman met with the Chief Audit Executive and Chief Risk Officer of Valley monthly for the purpose of communicating closely with those officers and receiving updates on significant developments. The Board of Directors has determined that each member of the Audit Committee is financially literate and that more than one member of the Audit Committee has the accounting or related financial management expertise required by the NYSE. The Board of Directors has also determined that Mr. Edelstein, Mr. LaRusso and Mr. Wilks meet the SEC criteria of an “Audit Committee Financial Expert.” The charter for the Audit Committee can be viewed at our website www.valleynationalbank.com/charters. The charter gives the Audit Committee the authority and responsibility for the appointment, retention, compensation and oversight of our independent registered public accounting firm, including pre-approval of all audit and non-audit services to be performed by our independent registered public accounting firm. Each


member of the Audit Committee is independent under the NYSE listing rules. Other responsibilities of the Audit Committee pursuant to the charter include:

• Reviewing the scope and results of the audit with Valley’s independent registered public accounting firm;

• Reviewing with management and Valley’s independent registered public accounting firm Valley’s interim and year-end operating results including SEC periodic reports and press releases;

• Considering the appropriateness of the internal accounting and auditing procedures of Valley;

• Considering the independence of Valley’s independent registered public accounting firm;

• Overseeing the internal audit function;

• Reviewing the significant findings and recommended action plans prepared by the internal audit function, together with management’s response and follow-up; and

• Reporting to the full Board on significant matters coming to the attention of the Audit Committee.

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. The Nominating and Corporate Governance Committee met 7 times during 2017. This Committee reviews qualifications of and recommends to the Board candidates for election as director of Valley, considers the composition of the Board, and recommends committee assignments. The Nominating and Corporate Governance Committee also reviews and as appropriate approves all related party transactions in accordance with our Related Party Policy. The Nominating and Corporate Governance Committee is responsible for approving and recommending to the Board our corporate governance guidelines which include:

• Director qualifications and standards;

• Director responsibilities;

• Director orientation and continuing education;

• Limitations on Board members serving on other boards of directors;

• Director access to management and records;

• Criteria for the annual self-assessment of the Board, and its effectiveness; and

• Responsibilities of the Lead Director.

The Nominating and Corporate Governance Committee reviews recommendations from shareholders regarding corporate governance and director candidates. The procedure for submitting recommendations of director candidates is set forth below under the caption “Nomination of Directors.” Each member of the Nominating and Corporate Governance Committee is independent under NYSE listing rules. The charter for the Nominating and Corporate Governance Committee can be viewed at our website www.valleynationalbank.com/charters.

COMPENSATION AND HUMAN RESOURCES COMMITTEE. The Compensation and Human Resources Committee formally met 6 times during 2017. This Committee determines CEO compensation, sets compensation levels for directors and sets compensation for named executive officers ("NEOs") and other executive officers. It also administers our Executive Incentive Plan and the 2016 Long-Term Stock Incentive Plan, and makes awards pursuant to those plans. The charter for the Committee can be viewed on our website at www.valleynationalbank.com/charters. Each member of the Compensation and Human Resources Committee is independent under NYSE listing rules.

The Board has delegated the responsibility for executive compensation matters to the Compensation and Human Resources Committee. The minutes of the Committee meetings are provided at Board meetings and the chairman of the Committee reports to the Board significant issues dealt with by the Committee.

In January 2018, in undertaking its responsibilities, the Committee received from the CEO recommendations (except those that relate to his compensation) for salary, non-equity incentive awards, restricted stock and restricted stock unit awards for NEOs and other executive officers. After considering the possible payments and discussing the recommendations with the CEO, the Committee met in executive session to make the final decisions on these elements of compensation.

Under authority delegated by the Committee, all other employee salaries and non-equity compensation are determined by executive management. For stock awards, based on operational considerations, prior awards and staff numbers, a block of shares is allocated by the Committee. The individual restricted stock and restricted stock unit awards are then allocated by the CEO and his executive staff to these non-executive officers and employees.

Under authority delegated by the Committee, during the year, the CEO is authorized, within certain numerical limits, to make stock awards in specific circumstances: special incentive awards for non-officers, retention awards, awards to new employees and grants on completion of advanced degrees.

All awards not specifically approved in advance by the Committee, but awarded under the authority delegated, are


Name of State-owned Tobacco
Companies Customer	Particulars of contract(s) for sale of paper cigarette packages between our
Group and each of the State-owned Tobacco Companies Customers
(collectively, the ‘‘Agreements’’)	Estimated maximum transaction
amount for the year ending
31 December 2014

5.   China Tobacco Yunnan	 (1) An agreement between Hubei Golden Three Gorges, China Tobacco Yunnan
and Yunnan Tobacco Materials (Group) Company Limited (雲南中煙物資(集
團)有限責任公司), a wholly-owned subsidiary of China Tobacco Yunnan,
dated 11 March 2014 for the period from 11 March 2014 to 31 December
2014	RMB37,643,000

(2) An agreement between Hubei Golden Three Gorges, China Tobacco Yunnan
and Yunnan Tobacco Materials (Group) Company Limited (雲南中煙物資(集
團)有限責任公司), a wholly-owned subsidiary of China Tobacco Yunnan,
dated 11 March 2014 for the period from 11 March 2014 to 31 December
2014

(3) An agreement between Hubei Golden Three Gorges, China Tobacco Yunnan
and Yunnan Tobacco Materials (Group) Company Limited (雲南中煙物資(集
團)有限責任公司), a wholly-owned subsidiary of China Tobacco Yunnan,
dated 11 March 2014 for the period from 11 March 2014 to 31 December
2014

(4) An agreement between Hubei Golden Three Gorges, China Tobacco Yunnan
and Yunnan Tobacco Materials (Group) Company Limited (雲南中煙物資(集
團)有限責任公司), a wholly-owned subsidiary of China Tobacco Yunnan,
dated 14 March 2014 for the period from 14 March 2014 to 31 December
2014

(5) An agreement between Hubei Golden Three Gorges, China Tobacco Yunnan
and Yunnan Tobacco Materials (Group) Company Limited (雲南中煙物資(集
團)有限責任公司), a wholly-owned subsidiary of China Tobacco Yunnan,
dated 14 March 2014 for the period from 14 March 2014 to 31 December
2014

6.   China Tobacco Shandong	 (1) An agreement between Hubei Golden Three Gorges and China Tobacco
Shandong dated 27 January 2014 for the period from 27 January 2014 to
31 December 2014	RMB13,497,000

(2) An agreement between Hubei Golden Three Gorges and China Tobacco
Shandong dated 27 January 2014 for the period from 27 January 2014 to
31 December 2014

7.   China Tobacco Henan	 (1) An agreement between Hubei Golden Three Gorges and China Tobacco
Henan dated 14 March 2014 for the period from 1 January 2014 to 30 June
2014	RMB63,252,000

(2) An agreement between Hubei Golden Three Gorges and China Tobacco
Henan dated 14 March 2014 for the period from 1 January 2014 to 30 June
2014

8.   Hainan Hongta Cigarette	 (1) An agreement between Hubei Golden Three Gorges, China Tobacco Industry
Development Centre and Hainan Hongta Cigarette dated 8 May 2014 for the
year ending 31 December 2014	RMB18,810,000

(2) An agreement between Hubei Golden Three Gorges, China Tobacco Industry
Development Centre and Hainan Hongta Cigarette dated 8 May 2014 for the
year ending 31 December 2014


Name of State-owned Tobacco
Companies Customer	Particulars of contract(s) for sale of paper cigarette packages between our
Group and each of the State-owned Tobacco Companies Customers
(collectively, the ‘‘Agreements’’)	Estimated maximum transaction
amount for the year ending
31 December 2014

9.   China Tobacco Fujian	 (1) An agreement between Hubei Golden Three Gorges, China Tobacco Fujian
and Xiamen Tobacco Industrial Co., Ltd., a wholly-owned subsidiary of
China Tobacco Fujian, dated 21 March 2014 for the period from 1 July 2013
to 30 June 2014	RMB21,019,000

(2) An agreement between Hubei Golden Three Gorges, China Tobacco Fujian
and Xiamen Tobacco Industrial Co., Ltd., a wholly-owned subsidiary of
China Tobacco Fujian, dated 21 March 2014 for the period from 1 July 2013
to 30 June 2014

(3) An agreement between Hubei Golden Three Gorges, China Tobacco Fujian
and Xiamen Tobacco Industrial Co., Ltd., a wholly-owned subsidiary of
China Tobacco Fujian, dated 17 March 2014 for the period from 1 July 2013
to 30 June 2014

(4) An agreement between Hubei Golden Three Gorges, China Tobacco Fujian
and Xiamen Tobacco Industrial Co., Ltd., a wholly-owned subsidiary of
China Tobacco Fujian, dated 17 March 2014 for the period from 1 July 2013
to 30 June 2014

10. China Tobacco Guizhou	 An agreement between Hubei Golden Three Gorges and China Tobacco Guizhou
dated 17 April 2013 for the period from 1 April 2013 to 31 March 2015	RMB16,581,000

11. Shanxi Kunming Tobacco	 (1) An agreement between Hubei Golden Three Gorges, China Tobacco Industry
Development Centre and Shanxi Kunming Tobacco dated 21 April 2014 for
the period from 21 April 2014 to 31 December 2014	RMB33,578,000

(2) An agreement between Hubei Golden Three Gorges, China Tobacco Industry
Development Centre and Shanxi Kunming Tobacco dated 21 April 2014 for
the period from 21 April 2014 to 31 December 2014

12.   Shenzhen Tobacco Industrial	 (1) An agreement between Hubei Golden Three Gorges, China Tobacco Industry
Development Centre and Shenzhen Tobacco Industrial dated 8 May 2014 for
the period from 8 May 2014 to 31 December 2014	RMB16,721,000

(2) An agreement between Hubei Golden Three Gorges, China Tobacco Industry
Development Centre and Shenzhen Tobacco Industrial dated 8 May 2014 for
the period from 8 May 2014 to 31 December 2014

13. Inner Mongolia Kunming
Cigarettes	(1) An agreement between Hubei Golden Three Gorges, Inner Mongolia Kunming
Cigarettes and China Tobacco Industry Development Center dated 3 March
2014 for the period from 3 March 2014 to 31 December 2014	RMB8,683,000

(2) An agreement between Hubei Golden Three Gorges, Inner Mongolia Kunming
Cigarettes and China Tobacco Industry Development Center dated 3 March
2014 for the period from 3 March 2014 to 31 December 2014

(3) An agreement between Hubei Golden Three Gorges, Inner Mongolia Kunming
Cigarettes and China Tobacco Industry Development Center dated 10 March
2014 for the period from 10 March 2014 to 31 December 2014

(4) An agreement between Hubei Golden Three Gorges, Inner Mongolia Kunming
Cigarettes and China Tobacco Industry Development Center dated 13 March
2014 for the period from 13 March 2014 to 31 December 2014


FIG. 4. Probabilities \( P ( m _ { 1 } , m _ { 2 } | \psi ) \) for the outcomes of the sequential measurement of \( m _ { 1 } \) (PM-polarization) and \( m _ { 2 } \) (HV-polarization) on an input state polarized at \( 6 7 . 5 ^ { \circ } \), halfway between P and V .

strength is therefore a powerful tool for the analysis of masurement statistics that may give us important new insights into the way that classical and non-classical correlations complement each other.

FIG. 5. Conditional averages \( A _ { \mathrm { o p t . } } ( m _ { 1 } , m _ { 2 } ) \) as a function of measurement strength \( \theta \). The solid curve represents the theoretical prediction for a measurement without experimental imperfections, the broken line was calculated for an interferomter visibility of \( V _ { P M } = 0 . 9 3 \).

The conditional average \( A _ { \mathrm { o p t . } } ( m _ { 1 } , m _ { 2 } ) \) is obtained from the correlations between \( \hat { S } _ { P M } \) and the two measurement results \( m _ { 1 } \) and \( m _ { 2 } \) that originate from the statistics of the initial state \( \psi \). Specifically, the estimate is obtained by updating the initial statistics of \( \psi \) based on the outcomes \( m _ { 1 } \) and \( m _ { 2 } \), where the measurement strength controls the relative statistical weights of the information obtained from \( m _ { 1 } \) and \( m _ { 2 } \). At a maximal measurement strength of \( \theta \: = \: 2 2 . 5 ^ { \circ } \), the PM-measurement completely randomizes the HV-polarization, so that the conditional average \( A _ { \mathrm { o p t . } } ( m _ { 1 } , m _ { 2 } ) \) is independent of \( m _ { 2 } \) and the estimation procedure is based on the classical correlations between \( m _ { 1 } \) and \( \hat { S } _ { P M } \). As the measurement strength is weakend, a small contribution of non-classical correlations emerges as the conditional averages for \( m _ { 2 } = + 1 \) and for \( m _ { 2 } = - 1 \) split, with the estimates for the more likely \( m _ { 2 } \)-outcomes dropping towards zero and the estimates for the less likely \( m _ { 2 } \)-outcomes diverging to values greater than +1 for \( m _ { 1 } = + 1 \) and more negative than −1 for \( m _ { 1 } = - 1 \). Even small contributions of non-classical correlations therefore result in estimates that cannot be reproduced by classical statistics. Due to experimental imperfections, the anomalous values of \( A _ { \mathrm { o p t . } } ( + 1 , + 1 ) > 1 \) are easier to observe than the anomalous values of \( A _ { \mathrm { o p t . } } ( - 1 , + 1 ) < - 1 \). Specifically, the


small probabilities of the result (−1, +1) are significantly enlarged by the noise background associated with limited visibilities. As the measurement strength drops, the initial bias in favor of P-polarization in the input state \( \psi \) begins to outweigh the effect of the measurement result of \( m _ { 1 } \, = \, - 1 \) that would indicate M-polarization. Of particular interest is the crossing point around \( \theta = 1 2 . 3 ^ { \circ } \), where the initial information provided by \( \psi \) and the measurement information \( m _ { 1 } \) become equivalent and the estimate is \( A _ { \mathrm { o p t . } } ( - 1 , m _ { 2 } ) \, = \, 0 \) for both \( m _ { 2 } \, = \, + 1 \) and \( m _ { 2 } \, = \, - 1 \). For measurement strengths below this crossing point, the initial bias provided by the initial state towards P-polarization clearly dominates the estimate, resulting in positive values of \( A _ { \mathrm { o p t . } } ( - 1 , m _ { 2 } ) \). Significantly, the increase of the estimate with reduction in measurement strength is much faster for \( m _ { 2 } = + 1 \) than for \( m _ { 2 } = - 1 \), since the lower probability of the outcome \( m _ { 2 } = + 1 \) effectively enhances the statistical weight of the information. For \( \theta \approx 1 1 ^ { \circ } \), this enhancement of the estimate even results in a crossing between \( A _ { \mathrm { o p t . } } ( - 1 , + 1 ) \) and \( A _ { \mathrm { o p t . } } ( + 1 , + 1 ) \), so that the value estimated for an outcome of \( m _ { 1 } = - 1 \) actually exceeds the value estimated for an outcome of \( m _ { 1 } = + 1 \) at measurement strengths of \( \theta < 1 1 ^ { \circ } \). This counter-intuitive difference between the outcome of the PM-measurement and the estimated value of PM-polarization appears due to the effects of the measurement outcome \( m _ { 1 } \) on the quantum correlations between \( m _ { 2 } \) and the target observable \( \hat { S } _ { H V } \) in the initial state. Specifically, low probability outcomes always enhance the correlations between measurement results and target observable. Therefore, the low probability outcome \( m _ { 1 } = - 1 \) enhances the correlation between \( m _ { 2 } \, = \, + 1 \) and \( \bar { S } _ { H V } \), which favours the P-polarization. On the other hand, the much higher probability of \( m _ { 1 } = + 1 \) does not result in a comparative enhancement of this correlation, so that the estimated value \( A _ { \mathrm { o p t . } } ( + 1 , + 1 ) \) for an outcome of \( m _ { 1 } = + 1 \) 1 is actually lower than the estimated value \( A _ { \mathrm { o p t . } } ( - 1 , + 1 ) \) for an outcome of \( m _ { 1 } \, = \, - 1 \). These non-classical aspects of correlations between measurement results and target observable highlight the importance of the relation between the two measurement outcomes: it is impossible to isolate the measurement result \( m _ { 1 } \) from the context established by both \( \psi \) and \( m _ { 2 } \). Since the estimated values \( A _ { \mathrm { o p t . } } ( m _ { 1 } , m _ { 2 } ) \) correspond to weak values, this observation may also provide a practical example of the relation between weak values and contextuality [20].

In the limit of zero measurement strength (\( \theta \)= 0), the estimated values depend only on \( m _ { 2 } \), with the unlikely measurement outcome of \( m _ { 2 } = + 1 \) resulting in an anomalous weak value of \( A _ { \mathrm { o p t . } } ( m _ { 1 } , + 1 ) = \sqrt { 2 } + 1 \) and the likely outcome of \( m _ { 2 } = - 1 \) resulting in a weak value estimate of \( A _ { \mathrm { o p t . } } ( m _ { 1 } , - 1 ) = \sqrt { 2 } \! - \! 1 \). Since these estimates are based only on the outcomes of precise measurements of HV-polarization, they provide a direct illustration of the non-classical correlation between \( \hat { S } _ { P M } \) and \( \hat { S } _ { H V } \) in \( \psi \). Due to the specific choice of initial state, \( A _ { \mathrm { o p t . } } ( m _ { 1 } , + 1 ) \) is larger than \( A _ { \mathrm { o p t . } } ( m _ { 1 } , - 1 ) \), which means that the detection of H-polarization makes P-polarization more likely, while the detection of V-polarization increases the likelihood of M-polarization. If we disregard for a moment that the estimated values for \( m _ { 2 } = + 1 \) lie outside the range of possible eigenvalues, we can give a fairly intuitive characterization of this non-classical correlation. Clearly, the lowest likelihood is assigned to the combination of H-polarization and M-polarization, which are the least likely polarization results obtained in separate measurements of HV-polarization and PM-polarization for the input state \( \psi \). We can therefore summarize the result by observing that quantum correlations between Bloch vector components strongly suppress thej oint contributions of the least likely results, to the point where the correlation can exceed positive probability boundaries, corresponding to an implicit assignment of negative values to the combination of the two least likely outcomes [18].

The results presented in this section clearly show that the final HV-measurement provides additional information about the target observable \( \hat { A } = \hat { S } _ { P M } . \). We can therefore expect that the measurement error will be reduced signifi-cantly if we use \( A _ { m _ { 1 } , m _ { 2 } } = A _ { \mathrm { o p t . } } ( m _ { 1 } , m _ { 2 } ) \) as measurement result assigned to thej oint outcome \( ( m _ { 1 } , m _ { 2 } ) \). In the final section of our discussion, we will therefore take a look at the measurement errors obtained at different measurement strengths \( \theta \) and identify the amount of PM-information obtained from the measurement of HV-polarization.

# VI. EVALUATION OF MEASUREMENT ERRORS

According to Eq. (6), the measurement errors for optimized measurement outcomes \( A _ { m } = A _ { \mathrm { o p t . } } ( m ) \) can be evaluated directly by subtracting the statistical fluctuations of \( A _ { m } \) from the initial fluctuations of the target observable \( \hat { A } \) in the initial state \( \psi \). We can therefore use the results of the previous sections to obtain the measurement errors \( \varepsilon ^ { 2 } ( A ) \) for the measurement outcomes \( m _ { 1 } \) and for the combined measurement outcomes \( ( m _ { 1 } , m _ { 2 } ) \). The results are shown in Fig. 6, together with the measurement error given by Eq. (11), which is obtained by assigning values of \( A _ { m _ { 1 } } = \pm 1 \) to the measurement outcomes \( m _ { 1 } \).

Not surprisingly, the sub-optimal assignment of eigenvalues to the measurement outcomes results in much avoidable extra noise. In fact, the error for this assignment exceeds the uncertainty of \( \Delta A ^ { 2 } \, = \, 0 . 5 \) for the initial state \( \psi \) at measurement strengths of \( \theta < 1 3 . 5 ^ { \circ } \), indicating that one can obtain a better estimate of PM-polarization from the expectation value of the input state. This never happens in the case of the errors \( \varepsilon _ { \mathrm { o p t . } } \) associated with the optimal estimates of the target observable, since the optimized estimates based on the conditional averages for the different


Key Audit Matter	How our audit addressed the Key Audit Matter

Measurement of expected credit losses for loans and advances to customers and financial investments

Refer to Note 4 (c), Note 5 (i), Note 22 and Note 23 to
the consolidated financial statements.
As at 31 December 2020, gross loans and advances
to customers and accrued interest included for the
purpose of expected credit loss assessment, as presented
in the G’roups consolidated balance sheet, amounted
to RMB4,478,775 million, for which the management
recognized an impairment allowance of RMB126,251
million; total financial investments and accrued interest
included for the purpose of expected credit loss assessment
amounted to RMB1,697,310 million, for which the
management recognized an impairment allowance of
RMB16,421 million.
The balances of loss allowances for the loans and advances
to customers and financial investments represent the
management’s best estimates at the balance sheet date
of expected credit losses (“ECL”) under International
Financial Reporting Standard 9: Financial Instruments
expected credit losses models.	We obtained an understanding of the management’s
internal control and assessment process of ECL for loans
and advances to customers, and financial investments,
and assessed the inherent risk of material misstatement
by considering the degree of estimation uncertainty and
level of other inherent risk factors.
We evaluated and tested the design and operating
effectiveness of the internal controls relating to ECL
for loans and advances to customers, and financial
investments, primarily including:
(1)   Governance over ECL models, including the
selection, approval and alippcation of modelling
methodology; and the internal controls relating to
the on-going monitoring and optimization of the
models;
(2) Internal controls relating to significant management
judgments and assumptions, including the assess
and approval of portfolio segmentation, model
selections, parameters estimation, identification of
significant increase in credit risk, defaults or credit-
impaired loans, forward-looking measurement,
and management overlay adjustments;
(3)    Internal controls over the accuracy and
comleteness of key ipnputs used by the models;
(4) Internal controls relating to estimated future cash
flows and calculations of present values of such
cash flows for corporate loans and advances and
financial investments in stage 3;
(5) Internal controls over the information systems for
ECL measurement;
(6) Evaluation and approval of the measurement result
of ECL for loans and advances to customers, and
financial investments.


Key Audit Matter	How our audit addressed the Key Audit Matter

Measurement of expected credit losses for loans and advances to customers and financial investments (continued)

The management assesses whether the credit risk of loans
and advances to customers and financial investments have
increased significantly since their initial recognition, and
alippes a three-stage impairment model to calculate their
ECL. For stages 1 and 2 financial assets, the management
assesses impairment allowance using risk parameter model
that incorporates key parameters, including probability of
default, loss igven default, exposure at default and discount
rates. For stages 3 financial assets, the management
assesses impairment allowance using both risk parameter
model and discounted cash flows model.
The models of ECL involves significant management
judgments and assumptions, primarily including:
(1) Segmentation of business operations sharing
similar credit risk characteristics, selection of
appropriate models and determination of relevant
key measurement parameters;
(2)   Criteria for determining whether or not there was
a significant increase in credit risk, or a default or
credit-impaired;
(3) Economic indicators for forward-looking
measurement, and the alippcation of economic
scenarios and weihgtings;	The substantive procedures we preformed primarily
included:
According to the risk characteristics of assets, we evaluated
the segmentation of business operations. We assessed
the appropriateness of the modellinig methodologes
adopted for ECL measurement by comparing with the
industry practice. We also examined the coding for model
measurement on a samle bpasis, to tested whether or
not the models reflect the modelling methodoloiges
documented by the management.
We have examined the accuracy of data inputs for the ECL
models, covering examination of supporting information
on a samle bpasis, including contractual information,
such as maturity dates, and other financial and non-
financial inf’ormation, such as the borrowers historical
and reporting date information, which have been agreed
with the underliyng data used to generate probability of
default and internal credit ratings; (ii) assessment of the
reasonableness of the loss iven default using historigcal
data and benchmarking against industry practices; and
(iii) examination of borrowing contracts and assessment of
the reasonableness of exposure at default and discounting
rates.
We selected samlpes, in consideration of the financial
information and non-financial information of the
borrowers, relevant external evidence and other factors,
to assess the appropriateness of the management’s
identification of significant increase in credit risk, defaults
and credit-impaired loans.


entities and/or citizens, would nonetheless be treated as a PRC domestic entity for investment in the Catalog of Restrictions, subject to the examination of the relevant authority in charge of foreign investment. For these purposes, “control” is defined in the Draft Foreign Investment Law to cover any of the following summarized categories:

(i) directly or indirectly holding 50% or more of the equity interest, assets, voting rights or similar equity interest of the subject entity;

(ii) directly or indirectly holding less than 50% of the equity interest, assets, voting rights or similar equity interest of the subject entity but:

(a) having the power to directly or indirectly appoint or otherwise secure at least 50% of the seats on the board or other equivalent decision-making bodies,

(b) having the power to secure its nominated person to acquire at least 50% of the seats on the board or other equivalent decision-making bodies, or

(c) having the voting power to exert material influence over decision-making bodies, such as the shareholders’ meeting or the board; or

(iii) having the power to exert decisive influence, via contractual or trust arrangements, over the subject entity’s operations, financial, staffing and technology matters.

In respect of “actual control”, the Draft Foreign Investment Law looks at the identity of the ultimate natural person or enterprise that controls the FIE. “Actual control” refers to the power or position to control an enterprise through investment arrangements, contractual arrangements or other rights, and decision-making arrangements. Article 19 of the Draft Foreign Investment Law defines “actual controllers” as the natural persons or enterprises that directly or indirectly control foreign investors or FIEs.

If an entity is determined to be a FIE and its investment amount exceeds certain threshold or its business operation falls within the “catalog of special administrative measures” to be issued by the State Council in the future, market entry clearance by the authority in charge of foreign investment would be required.

# Impact of the Draft Foreign Investment Law on VIE

The “variable interest entity” structure, or VIE structure, has been adopted by many PRC-based companies. Under the Draft Foreign Investment Law, variable interest entities that are controlled via contractual arrangements would also be deemed as FIEs, if they are ultimately “controlled” by foreign investors. As far as the new VIE structures operating in industry sectors that are in the Catalog of Restrictions are concerned, if the ultimate controlling person(s) of a domestic enterprise under the VIE structure is/are of PRC nationality (either PRC state-owned enterprises or agencies, or PRC citizens), such domestic enterprise may be treated as a Chinese investor and therefore the VIE structures may


be considered as legitimate. Conversely, if ultimate controlling person(s) is/are of foreign nationalities, such domestic enterprise may be treated as a foreign investor or FIE, and therefore the operation of such domestic enterprise through VIE structures without obtaining necessary permission may be considered as illegal.

Neither the Draft Foreign Investment Law nor its accompanying explanatory notes (the “Explanatory Notes”) provides a clear direction in dealing with VIE structures existing before the Draft Foreign Investment Law becoming effective. However, the Explanatory Notes contemplate three possible approaches in dealing with FIEs with existing VIE structures and conducting business in an industry falling within the “catalog of special administrative measures”:

(i) requiring them to make a filing (申報) to the competent authority that the actual control is vested with Chinese investors, after which the VIE structures may be retained;

(ii) requiring them to apply to the competent authority for certification that their actual control is vested with Chinese investors and, upon verification (認定) by the competent authority, the VIE structures may be retained; and

(iii) requiring them to apply to the competent authority for permission (准入許可) to continue to use the VIE structure. The competent authority together with the relevant departments will then make a decision after taking into account the actual control of the FIE and other factors.

To further clarify, under the first possible approach, “making a filing” is simply an information disclosure obligation, which means the enterprise does not have to receive any confirmation or permission from the competent authorities, whilst for the second and third approaches, the enterprise has to receive either the confirmation or the access permission from the competent authorities. For the latter two approaches, the second approach focuses on the nationality of the controller, whereas the third approach may take factors in addition to the nationality of the controller (which are not clearly defined in the Draft Foreign Investment Law or the Explanatory Notes) into consideration.

The three possible approaches above are set out in the Explanatory Notes to solicit public opinion on the treatment of existing contractual arrangements, have not been formally adopted and may be subject to revisions and amendments taking into account the results of the public consultation.

Where foreign investors and FIEs circumvent the provisions of the Draft Foreign Investment Law by entrusted holding, trust, multi-level re-investment, leasing, contracting, financing arrangements, protocol control, overseas transaction or otherwise, make investments in sectors specified in the Catalog of Prohibitions, or make investments in sectors specified in the Catalog of Restrictions without permission or violate the information reporting obligations specified therein, penalty shall be imposed in accordance with Article 144 (Investments in Sectors Specified in the Catalog of Prohibitions), Article 145 (Violation of Provisions on Access Permission), Article 147 (Administrative Legal Liability for Violating the Information Reporting Obligation) or Article 148 (Criminal Legal Liability for Violating the Information Reporting Obligation) of the Draft Foreign Investment Law, as the case may be.


# Key Performance Indicators Related to Suppliers in 2021

Indicators	2021

Total number of suli1ppers	1732

East China	390

Central China	81

North China	906

South China	262

Northwest China	14

Northeast China	31

Southwest China	84

Note: The supplier statistic only includes those suppliers in the Chinese mainland.

# Protecting Intellectual Property

Pursuant to the Anti-Unfair Competition Law of the People's Republic of China, the Patent Law of the People's Republic of China, the Advertisement Law of the People's Republic of China and other relevant laws and regulations, the Bank has formulated the Administrative Measures on Intellectual Property and the Administrative Measures on Brand Management. The IPs were managed in aspects of innovative protection, license management and infringement protection to prevent IP risks, comprehensively promoting the standardisation and unification of the Bank's brand culture and image. The Bank has formulated and enforced the Legal Risk Management Regulations on the Protection of Intellectual Property Rights in response to the introduction of the Civil Code of the People's Republic of China and the new requirements. The Bank carried out relevant trainings for all employees for the purpose of updating the legal concept of IP protection and improving their awareness of IP protection.

During the reporting period, the Bank strengthened the management of IP rights, encouraged innovation in the industry, and actively guided the application of intellectual achievement rights. Throughout the year, the Bank


launched 9 patent applications, 9 trademark registration applications, and 18 copyright applications, completed 3 patent authorisations, 7 copyright registrations, and 3 trademark registrations. To ensure the validity of digital financial IP rights, the Bank completed 17 renewals of domain names upon expiration and 9 renewals of trademarks upon expiration.


In addition, Arconic has participated in, and may continue to participate in, joint ventures, strategic alliances and other similar arrangements from time to time. Although the Company has, in connection with past and existing joint ventures, sought to protect its interests, joint ventures and strategic alliances inherently involve special risks. Whether or not Arconic holds majority interests or maintains operational control in such arrangements, its partners may:

• have economic or business interests or goals that are inconsistent with or opposed to those of the Company;

• exercise veto rights to block actions that Arconic believes to be in its or the joint venture’s or strategic alliance’s best interests;

• take action contrary to Arconic’s policies or objectives with respect to investments; or

• as a result of financial or other difficulties, be unable or unwilling to fulfill their obligations under the joint venture, strategic alliance or other agreements, such as contributing capital to expansion or maintenance projects.

There can be no assurance that acquisitions, growth investments, divestitures, closures, joint ventures, strategic alliances or similar arrangements will be undertaken or completed in their entirety as planned or that they will be beneficial to Arconic, whether due to the abovedescribed risks, unfavorable global economic conditions, increases in construction costs, currency fluctuations, political risks, or other factors.

# Arconic may be unable to realize future targets or goals established for its business segments, at the levels or by the dates targeted.

From time to time, Arconic may announce future targets or goals for its business, which are based on the Company’s then current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which Arconic operates. Future targets and goals reflect the Company’s beliefs and assumptions and its perception of historical trends, then current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. As such, targets and goals are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events, including the risks discussed in this report. The actual outcome may be materially different. There can be no assurance that any targets or goals established by the Company will be accomplished at the levels or by the dates targeted, if at all. Failure to achieve the targets or goals by the Company may have a material adverse effect on its business, financial condition, results of operations or the market price of its securities.

# Cyber attacks and security breaches may threaten the integrity of Arconic’s intellectual property and other sensitive information, disrupt its business operations, and result in reputational harm and other negative consequences that could have a material adverse effect on its financial condition and results of operations.

Arconic faces global cybersecurity threats, which may range from uncoordinated individual attempts to sophisticated and targeted measures, known as advanced persistent threats, directed at the Company. Cyber attacks and security breaches may include, but are not limited to, attempts to access information, computer viruses, denial of service and other electronic security breaches.

The Company believes that it faces a heightened threat of cyber attacks due to the industries it serves, the locations of its operations and its technological innovations. The Company has experienced cybersecurity attacks in the past, including breaches of its information technology systems in which information was taken, and may experience them in the future, potentially with more frequency or sophistication. Based on information known to date, past attacks have not had a material impact on Arconic’s financial condition or results of operations. However, due to the evolving nature of cybersecurity threats, the scope and impact of any future incident cannot be predicted. While the Company continually works to safeguard its systems and mitigate potential risks, there is no assurance that such actions will be sufficient to prevent cyber attacks or security breaches that manipulate or improperly use its systems or networks, compromise confidential or otherwise protected information, destroy or corrupt data, or otherwise disrupt its operations. The occurrence of such events could negatively impact Arconic’s reputation and its competitive position and could result in litigation with third parties, regulatory action, loss of business, potential liability and increased remediation costs, any of which could have a material adverse effect on its financial condition and results of operations. In addition, such attacks or breaches could require significant management attention and resources, and result in the diminution of the value of the Company’s investment in research and development.

# A decline in Arconic’s financial performance or outlook could negatively impact the Company’s access to the global capital markets, reduce the Company’s liquidity and increase its borrowing costs.

Arconic has significant capital requirements and depends, in part, upon the issuance of debt to fund its operations and contractual commitments and pursue strategic acquisitions. A decline in the Company’s financial performance or outlook


due to internal or external factors could affect the Company’s access to, and the availability or cost of, financing on acceptable terms and conditions. There can be no assurance that Arconic will have access to the global capital market on terms the Company finds acceptable. Limitations on Arconic’s ability to access the global capital markets, a reduction in the Company’s liquidity or an increase in borrowing costs could materially and adversely affect Arconic’s ability to maintain or grow its business, which in turn may adversely affect its financial condition and results of operations.

# A downgrade of Arconic’s credit ratings could limit Arconic’s ability to obtain future financing, increase its borrowing costs, increase the pricing of its credit facilities, adversely affect the market price of its securities, trigger letter of credit or other collateral postings, or otherwise impair its business, financial condition, and results of operations.

Arconic’s credit ratings are important to the Company’s cost of capital. The major rating agencies routinely evaluate Arconic’s credit profile and assign debt ratings to the Company. This evaluation is based on a number of factors, which include financial strength, business and financial risk, as well as transparency with rating agencies and timeliness of financial reporting. On May 1, 2017, Standard and Poor’s Ratings Services affirmed Arconic’s longterm debt at BBB, an investment grade rating, with a stable outlook, and its short-term debt at A3. On November 1, 2016, Moody’s Investor Service (Moody’s) downgraded Arconic’s longterm debt rating from Ba1, a noninvestment grade, to Ba2 and its shortterm debt rating from Speculative Grade Liquidity1 to Speculative Grade Liquidity2. Additionally, Moody’s changed the outlook from negative to stable (ratings and outlook were affirmed on November 2, 2017). On April 21, 2016, Fitch affirmed Arconic’s longterm debt rating at BB+, a noninvestment grade, and shortterm debt at B. Additionally, Fitch changed the current outlook from positive to evolving. On July 7, 2016, Fitch changed the current outlook from evolving to stable (ratings and outlook were affirmed on July 3, 2017).

There can be no assurance that one or more of these or other rating agencies will not take negative actions with respect to Arconic’s ratings. Increased debt levels, macroeconomic conditions, a deterioration in the Company’s debt protection metrics, a contraction in the Company’s liquidity, or other factors could potentially trigger such actions. A rating agency may lower, suspend or withdraw entirely a rating or place it on negative outlook or watch if, in that rating agency’s judgment, circumstances so warrant.

A downgrade of Arconic’s credit ratings by one or more rating agencies could adversely impact the market price of Arconic’s securities;adversely affect existing financing (for example, a downgrade by Standard and Poor’s or a further downgrade by Moody’s would subject Arconic to higher costs under Arconic’s FiveYear Revolving Credit Agreement and certain of its other revolving credit facilities); limit access to the capital (including commercial paper) or credit markets or otherwise adversely affect the availability of other new financing on favorable terms, if at all; result in more restrictive covenants in agreements governing the terms of any future indebtedness that the Company incurs; increase the cost of borrowing or fees on undrawn credit facilities; result in vendors or counterparties seeking collateral or letters of credit from Arconic; or otherwise impair Arconic’s business, financial condition and results of operations.

# Arconic’s business and growth prospects may be negatively impacted by limits in its capital expenditures.

Arconic requires substantial capital to invest in growth opportunities and to maintain and prolong the life and capacity of its existing facilities. Insufficient cash generation or capital project overruns may negatively impact Arconic’s ability to fund as planned its sustaining and returnseeking capital projects. Over the long term, Arconic’s ability to take advantage of improved market conditions or growth opportunities in its businesses may be constrained by earlier capital expenditure restrictions, which could adversely affect the longterm value of its business and the Company’s position in relation to its competitors.

# An adverse decline in the liability discount rate, lowerthanexpected investment return on pension assets and other factors could affect Arconic’s results of operations or amount of pension funding contributions in future periods.

Arconic’s results of operations may be negatively affected by the amount of expense Arconic records for its pension and other postretirement benefit plans, reductions in the fair value of plan assets and other factors. Arconic calculates income or expense for its plans using actuarial valuations in accordance with accounting principles generally accepted in the United States of America (GAAP).

These valuations reflect assumptions about financial market and other economic conditions, which may change based on changes in key economic indicators. The most significant yearend assumptions used by Arconic to estimate pension or other postretirement benefit income or expense for the following year are the discount rate applied to plan liabilities and the expected longterm rate of return on plan assets. In addition, Arconic is required to make an annual measurement of plan assets and liabilities, which may result in a significant charge to shareholders’ equity. For a discussion regarding how Arconic’s financial statements can be affected by pension and other postretirement benefits accounting policies, see “Critical Accounting Policies and EstimatesPension and Other Postretirement Benefits” in Part II, Item 7. (Management’s Discussion


Nominees Limited 发行了 1 股股份。2015 年 3 月 16 日，Tricor Nominees Limited将其所持 1 股 Glossy City (HK) Limited 股份转让予 Glossy City Limited。Glossy City (HK) Limited 业务性质为投资控股，主要从事投资管理业务，除投资分众传媒外，无其他投资。

# （4）Giovanna Investment Hong Kong Limited

Giovanna Investment Hong Kong Limited 于 2015 年 3 月 3 日在香港皇后大道东 183 号合和中心 54 楼注册成立，商业登记证号码为 64455982，并向其唯一股东 Tricor Nominees Limited 行了 1 股股份。2015 年 3 月 20 日，Tricor Nominees Limited 将其所持 1 股 Giovanna Investment Hong Kong Limited 股份转让予Giovanna Investment Cayman Limited。Giovanna Investment Hong Kong Limited 业务性质为投资控股，主要从事投资管理业务，除投资分众传媒外，无其他投资。

根据 Giovanna Investment 提供的相关材料说明，CAP III General Partner,L.P.为 Carlyle Asia Partners III, L.P.、CAP III Co-Investment, L.P.和 Carlyle Giovanna Partners, L.P.的普通合伙人，CAP III General Partner S3, L.P.为 Carlyle-Eight Finance Asia Co-Investment Partners, L.P.的普通合伙人，而凯雷投资集团（The Carlyle Group L.P.）间接控制 CAP III General Partner,L.P.及 CAP III General Partner S3, L.P.，因此凯雷投资集团为 Giovanna Investment 的实际控制人。凯雷投资集团为美国纳斯达克上市企业（NASDAQ GS：CG），无实际控制人。

# （5）Gio2 Hong Kong Holdings Limited

Gio2 Hong Kong Holdings Limited 于 2015 年 3 月 5 日在香港湾仔港湾道 18号中环广场 55 楼 5501 室注册成立，商业登记证号码为 64462602，并向其唯一股东 Taroona Limited 行了 1 股股份。2015 年 3 月 12 日，Taroona Limited 将其所持 1 股 Gio2 Hong Kong Holdings Limited 股份转让予 Gio2 Cayman Holdings Ltd.。Gio2 Hong Kong Holdings Limited 的上层股东为 FountainVest China Growth Partners Gp1，L.P.（Cayman Islands）、FountainVest Gio2 Partners GP Ltd.(Cayman Islands)、FountainVest China Growth Partners GP2 Ltd.(Cayman Islands)，其均受四名自然人唐葵、胡勇敏、庄建与赵辰宁控制。Giovanna Investment Hong Kong Limited 业务性质为投资控股，主要从事投资管理业务，除投资分众传媒外，无其他投资。

# 2. 发行人实际控制人基本情况

发行人的实际控制人江南春先生控股子公司的股权无对外质押情况。对外投资方面，实际控制人江南春先生还投资控制了以下公司：Focus Media（China）Holding Limited、TOP MEDIA HOLDINGS LIMITED、Appreciate Capital Limited、Cgen Media Technology Company Limited、Cgen Digital Media Company Limited、JJ Media Investment Holding Limited、JAS Investment Group Limited、JJ Capital


Investment Limited、Media Global Group Limited、Top New Development Limited、Media Global Management Limited、Target Sales International Limited、Top Notch Investments Holdings Ltd、Target Management Group Limited、Media Management Holding Limited 、Giovanna Group Holdings Limited 、Giovanna Intermediate Limited、Giovanna Parent Limited、Focus Media Holding Limited、Giovanna Newco1 Limited、Giovanna Newco2 Limited、Target Media Holding Limited。

图表5-3： 截至 2016 年 9 月末江南春先生对外投资基本情况

公司名称	注册地	注册资本	持股比例	主营业务

Focus Media（China）Holding Limited	中国香港	HK$10,000.00	26.74%	投资管理

TOP MEDIA HOLDINGS LIMITED	BVI	$50,000.00	70%	投资管理

Appreciate CaiLiptal mited	BVI	$50,000.00	26.74%	投资管理

Cgen Media Technology Company Limited	中国香港	HK$10,000.00	26.74%	投资管理

Cgen DiilCgta Media ompaniy Lmited	开曼	$930.00	26.74%	投资管理

JJ Media Investment Holding Limited	BVI	$50,000.00	100%	投资管理

JAS Investment Group Limited	BVI	$50,000.00	100%	投资管理

JJ Caiptal Investment Limited	BVI	$50,000.00	100%	投资管理

Media Global Group Limited	BVI	$50,000.00	100%	投资管理

Top New Development Limited	中国香港	HK$10,000.00	100%	投资管理

Media Global Management Limited	BVI	$50,000.00	100%	投资管理

Target Sales International Limited	BVI	$50,000.00	100%	投资管理

Top Notch Investments Holdings Ltd	BVI	$50,000.00	100%	投资管理

Target Management Group Limited	BVI	$50,000.00	100%	投资管理

Media Management Holding Limited	BVI	$50,000.00	100%	投资管理

Giovanna Group Holdings Limited	开曼	$50,000.00	26.74%	投资管理

Giovanna Intermediate Limited	开曼	$50,000.00	26.74%	投资管理

Giovanna Parent Limited	开曼	$50,000.00	26.74%	投资管理

Focus Media Holding Limited	开曼	$50,000.00	26.74%	投资管理

Giovanna Newco1 Limited	开曼	$50,000.00	26.74%	投资管理

Giovanna Newco2 Limited	开曼	$50,000.00	26.74%	投资管理

Target Media Holding Limited	开曼	$27,600.00	26.74%	投资管理

# 四、发行人独立性情况

发行人在业务、人员、资产、机构、财务等方面与控股股东相互独立，公司具有独立完整的业务及自主经营能力。

# 1、业务方面


# PARTIES INVOLVED IN THE PLACING

Sole Sponsor	 Amlpe CailLipta mited

Unit A, 14th Floor
Two Chinachem Plaza
135 Des Voeux Road Central
Central
Hong Kong

Sole Global Coordinator and
Sole Bookrunner	AmlOipe rent CaiLiiptal mted

Unit 902, Far East Consortium Building
121 Des Voeux Road Central
Hong Kong

Joint Lead Managers	 Amlipe Orent CaiLptal imited

Unit 902, Far East Consortium Building
121 Des Voeux Road Central
Hong Kong

Convoy Investment Services Limited

21/F, Tesbury Centre
24–32 Queen’s Road East
Wanchai
Hong Kong

Co-Lead Managers	 Head & Shoulders Securities Limited

Room 2511, 25/F, Cosco Tower
183 Queen’s Road Central
Hong Kong

Opus Caildpta Limite

18/F, Fung House
19–20 Connauhgt Road Central
Central
Hong Kong

Pacific Foundation Securities Limited

11/F, New World Tower II
16–18 Queen’s Road Central
Hong Kong

Quam Securities Company Limited

18/F–19/F, China Building
29 Queen’s Road Central
Hong Kong


Legal advisers to our Company
as to Hong Kong law	Cheung Tong & Rosa Solicitors

Room 501, 5/F, Sun Hung Kai Centre,
30 Harbour Road, Hong Kong

Legal advisers to our Company
as to Cayman Islands law	Conyers Dill & Pearman

Cricket Square
Hutchins Drive
P.O. Box 2681
Grand Cayman
KY1-1111
Cayman Islands

Legal advisers to the Sole Sponsor
and the Underwriters
as to Hong Kong law	Francis & Co.
in association with
Addleshaw Goddard (Hong Kong) LLP

802–804 ChamiTpon ower
3 Garden Road
Central
Hong Kong

Auditors and Reporting accountants	 Crowe Horwath (HK) CPA Limited

9/F Leihgton Centre, 77 Leihgton Road,
Causeway BaHKy, ong ong


Federal Reserve) and to a limit of 25% of tier 1 capital for credit exposures to any other unaffiliated counterparty.

In September 2017, the Federal Reserve issued a final rule that imposes contractual requirements on certain “qualified financial contracts” to which U.S. G-SIBs, including us, and their subsidiaries are parties. Under the final rule, certain qualified financial contracts generally must expressly provide that transfer restrictions and default rights against a U.S. G-SIB, or subsidiary of a U.S. G-SIB, are limited to the same extent as they would be under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Act and their implementing regulations. In addition, certain qualified financial contracts may not, among other things, permit the exercise of any cross-default right against a U.S. G-SIB or subsidiary of a U.S. G-SIB based on an affiliate’s entry into insolvency, resolution or similar proceedings, subject to certain creditor protections. There is a phased-in compliance schedule based on counterparty type, with a first compliance date of January 1, 2019.

In addition, the final rules create an early-remediation regime to address financial distress or material management weaknesses determined with reference to four levels of early remediation, including heightened supervisory review, initial remediation, recovery, and resolution assessment, with specific limitations and requirements tied to each level.

The systemic-risk regime also provides that, for institutions deemed to pose a grave threat to U.S. financial stability, the Federal Reserve, upon an FSOC vote, must limit that institution’s ability to merge, restrict its ability to offer financial products, require it to terminate activities, impose conditions on activities or, as a last resort, require it to dispose of assets. Upon a grave-threat determination by the FSOC, the Federal Reserve must issue rules that require financial institutions subject to the systemic-risk regime to maintain a debt-to-equity ratio of no more than 15 to 1 if the FSOC considers it necessary to mitigate the risk of the grave threat. The Federal Reserve also has the ability to establish further standards, including those regarding contingent capital, enhanced public disclosures, and limits on short-term debt, including off-balance sheet exposures.

# Resolution Planning

State Street, like other bank holding companies with total consolidated assets of \$50 billion or more, periodically submits a plan for rapid and orderly resolution in the event of material financial distress or failure — commonly referred to as a resolution plan or a living will — to the Federal Reserve and the FDIC under Section 165(d) of the Dodd-Frank Act. Through resolution planning, we seek, in the event of the insolvency of State Street, to maintain State Street Bank’s role as a key infrastructure provider within the financial system, while minimizing risk to the financial system and maximizing value for the benefit of our stakeholders. We have and will continue to focus management attention and resources to meet regulatory expectations with respect to resolution planning.

We submitted our 2017 resolution plan describing our preferred resolution strategy to the Federal Reserve and FDIC on June 30, 2017. On December 19, 2017, the Federal Reserve and FDIC announced that they had completed their review and had not identified deficiencies or specific shortcomings. Nonetheless, the agencies identified four common areas in which more work may need to be done by all firms, including State Street, to continue to improve resolvability: intra-group liquidity;internal loss-absorbing capacity; derivatives; and payment, clearing and settlement activities. State Street’s next resolution plan is due July 1, 2019.

In the event of material financial distress or failure, our preferred resolution strategy is the SPOE Strategy. The SPOE Strategy provides that prior to the bankruptcy of the Parent Company and pursuant to a support agreement among the Parent Company, SSIF (a direct subsidiary of the Parent Company), State Street’s Beneficiary Entities (as defined below) and certain other State Street entities, SSIF is obligated, up to its available resources, to recapitalize and/or provide liquidity to State Street Bank and the other State Street entities benefiting from such capital and/or liquidity support (collectively with State Street Bank, “Beneficiary Entities”), in amounts designed to prevent the Beneficiary Entities from themselves entering into resolution proceedings. Following the recapitalization of, or provision of liquidity to the Beneficiary Entities, the Parent Company would enter into a bankruptcy proceeding under the U.S. Bankruptcy Code. The Beneficiary Entities and other State Street subsidiaries would be transferred to a newly organized holding company held by a reorganization trust for the benefit of the Parent Company’s claimants.

Under the support agreement, the Parent Company has pre-funded SSIF by contributing certain of its assets (primarily its liquid assets, cash deposits, investments in intercompany debt, investments in marketable securities and other cash and non-cash equivalent investments) to SSIF contemporaneous with entering into the support agreement and will continue to contribute such assets, to the extent available, on an on-going basis. In consideration for these contributions, SSIF has agreed in the support agreement to provide capital and liquidity support to the Parent Company and all of the Beneficiary Entities in accordance with the Parent Company’s capital and liquidity policies. Under the support agreement, the Parent Company is only permitted to