ChatDOC/OCRFlux-bench-single huggingface dataset:
# 34. Related Party Transactions

# (A) In addition to the transactions and balances detailed elsewhere in these financial statements, the Group had the following transactions with related parties during the year:

Notes	2020	2019
HK$’000	HK$’000
Rental expense to a related party	(i)	–	36
Management fee from associates	(ii)	–	660
Sales of food and other operating items to associates	(iii)	–	4,620

Notes:

(i) The rental expense to a related party, Madam Chan Sai Ying, who is the spouse of Mr. Chung Wai Ping, was charged based on mutually agreed terms at a monthly fixed amount of HK\$4,000 during the year ended 31 December 2019.

(ii) The management fee was charged to associates based on 1 to 2% of gross receipt during the year ended 31 December 2019.

(iii) Sales of food and other operating items to associates were charged based on mutually agreed terms and conditions.

# (B) Compensation of key management personnel of the Group

The compensation of key management personnel of the Group for each reporting period represented the directors’ emoluments as disclosed in note 8 to the financial statements.

The related party transaction mentioned in note (a)(i) above constitutes a continuing connected transaction as defined in Chapter 14A of the Listing Rules.
option (whether legally enforceable or not) to subscribe for or purchase, or to nominate persons to subscribe for or purchase, any Shares or any securities of any member of the Group.

Following the completion of the Global Offering, the Hong Kong Underwriters and their affiliated companies may hold a certain portion of the Shares as a result of fulfilling their respective obligations under the Hong Kong Underwriting Agreement.

# International Offering

# International Underwriting Agreement

In connection with the International Offering, the Company and the Controlling Shareholders expect to enter into the International Underwriting Agreement with the International Underwriters on the Price Determination Date. Under the International Underwriting Agreement and subject to the Over-allotment Option, the International Underwriters would, subject to certain conditions set out therein, agree severally but notj ointly to procure subscribers for, or themselves to subscribe for, their respective applicable proportions of the International Offer Shares initially being offered pursuant to the International Offering. It is expected that the International Underwriting Agreement may be terminated on similar grounds as the Hong Kong Underwriting Agreement. Potential investors should note that in the event that the International Underwriting Agreement is not entered into, the Global Offering will not proceed. Please see “Structure of the Global Offering—The International Offering.”

# Over-allotment Option

The Company is expected to grant to the International Underwriters the Over-allotment Option, exercisable by the Joint Global Coordinators on behalf of the International Underwriters at any time from the Listing Date until 30 days after the last day for lodging applications under the Hong Kong Public Offering, pursuant to which the Company may be required to issue up to an aggregate of 53,000,000 Shares, representing not more than 15% of the number of Offer Shares initially available under the Global Offering, at the Offer Price, to, among other things, cover over-allocations in the International Offering, if any. Please see “Structure of the Global Offering—Over-allotment Option.”

# Indemnity

Each of our Company and the Controlling Shareholders has agreed to indemnify the Hong Kong Underwriters and International Underwriters for certain losses which they may suffer or incur, including losses arising from their performance of their obligations under the Underwriting Agreements and any breach by any of the Company and the Controlling Shareholders of the Hong Kong Underwriting Agreements.

# Total Commissions and Expenses

The Underwriters will receive an underwriting commission of 2.5% of the aggregate Offer Price of all the Offer Shares (including any Offer Shares to be issued pursuant to the exercise of the Over-allotment Option), out of which they will pay any sub-underwriting commissions and other fees.

The Underwriters may receive a discretionary incentive fee of up to 1.0% of the aggregate Offer Price of all the Offer Shares (including any Offer Shares to be issued pursuant to the exercise of the Over-allotment Option).
For any unsubscribed Hong Kong Offer Shares reallocated to the International Offering, the underwriting commission will not be paid to the Hong Kong Underwriters but will instead be paid, at the rate applicable to the International Offering, to the relevant International Underwriters.

The aggregate underwriting commissions payable to the Underwriters in relation to the Global Offering (assuming an Offer Price of HK\$2.39 per Offer Share (which is the mid-point of the Offer Price range), the full payment of the discretionary incentive fee and the exercise of the Over-allotment Option in full) will be approximately HK\$34.0 million.

The aggregate underwriting commissions and fees together with the Stock Exchange listing fees, the SFC transaction levy and the Stock Exchange trading fee, legal and other professional fees and printing and all other expenses relating to the Global Offering are estimated to be approximately HK\$91.6 million (assuming an Offer Price of HK\$2.39 per Offer Share (which is the mid-point of the Offer Price range), the full payment of the discretionary incentive fee and the exercise of the Over-allotment Option in full) and will be paid by our Company.

# Indemnity

Each of our Company and the Controlling Shareholders has agreed to indemnify the Hong Kong Underwriters and International Underwriters for certain losses which they may suffer or incur, including losses arising from their performance of their obligations under the Underwriting Agreements and any breach by any of the Company and the Controlling Shareholders of the Hong Kong Underwriting Agreements.

# Hong Kong Underwriters’ Interests in our Company

Save as disclosed in this prospectus and save for its obligations under the Hong Kong Underwriting Agreement, the Hong Kong Underwriters do not have any shareholding interests in our Company or the right or option (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in our Company.

Following the completion of the Global Offering, the Underwriters and their affiliated companies may hold a certain portion of the Shares as a result of fulfilling their obligations under the Underwriting Agreements.

# Other Services to our Company

The Joint Global Coordinators and the Underwriters or its respective affiliates have, from time to time, provided and expect to provide in the future investment banking and other services to our Company and our respective affiliates, for which such Joint Global Coordinators and the Underwriters or their respective affiliates have received or will receive customary fees and commissions

# Sponsors’ Independence

The Joint Sponsors satisfy the independence criteria applicable to sponsors set out in Rule 3A.07 of the Listing Rules.

# ACTIVITIES BY SYNDICATE MEMBERS

The underwriters of the Hong Kong Public Offering and the International Offering (together, the “Syndicate Members”) and their affiliates may each individually undertake a variety of activities (as further described below) which do not form part of the underwriting or stabilizing process.
Libertatem would suggest: The UK adopts the MIFID II definitions which make Independent” advisers. Fee based, whole of market and Independent of undue influence via ownership or other agreement. This would allow most restricted advisers to re-join the Independent camp

Under MIFID II: Non-Independent advisers can receive commission, use panels of providers etc. As long as this is properly disclosed we feel that this may well provide access to advice for some of those who were disenfranchised by RDR. It may make sense to remove the term “Restricted” and use the term “Regulated”.

Adopting MIFID II definitions would both realign the UK with Europe but also use terms which are more easily understood

That all the stakeholders agree a set of definitions for advice and guidance which are used by all to improve communication and avoid many of the current misunderstandings.

Q3: What comments do you have on consumer demand for professional financial advice?

Thanks to THR2: We know that the historical market for Independent Advice was 16m. We also know that advisers could be split into three specific groups.

THR2 Identified the numbers of clients under each definition

Boutique advisers enjoy a per adviser range between 10 and 120 although the current average is 159. This is likely to drop significantly.

Segregated Adviser will be the way forward for the adviser who wants more than a lifestyle business as it can offer a capital exit in the future. The current per adviser average is 191

Generalist/Transactional advisers currently show 205 active clients per adviser. But they also have another 400+ old clients who may return.

Most of the 3,250 who have exited the sector since 2010 have been Generalist adviser and some had client banks in excess of 1,000 clients

Libertatem suggests: At least 4m consumers seem to have successfully made the RDR transaction to fees. Circa 2,500 – mostly attached to generalist advisers - may be less secure particularly if we continue to see Trail Commission being reneged on by providers.

If we are to see a reconnection between advice and the 10m ex IFA clients, we will need to recreate the new version of the commission based market (See National Advice Service)
# Q.4: Do you have any comments or evidence on the level of demand for advice from sources other than professional financial advisers?

There is no shortage of PR noise from a number of investment platforms that seek to deal directly with the client. But currently there is little evidence that this noise is converting into profitable business. Such firms will have resolved the matter in the next 3 years. Either they will have reached the tipping point into profit or their investors will have given up.

The missing link of many non-advised options is “the Challenge”.

This is the first step to a client making private provision and the most important aspect of an adviser’s day. The challenge comes twice in any client relationship. Firstly, when a client is challenged to seek advice and secondly when the client is challenged to accept the solutions are suggested.

This challenge can only be done by human interaction. We do not see it being done by computers, Robo Advice or other androids. It is possible via Skype but better achieved face to face. Much of the enthusiasm for new processes presumes that clients will challenge themselves – this is unlikely and unproven.

The price of RDR’s commission free world is the removal of that challenge from the common man and with it any independence from the state when in need.

# Q5: Do you have any comments or evidence on the types of financial needs for which consumers may seek advice?

RDR has sought to push the adviser community towards the Boutique model. It presumed that all clients wanted an intimate relationship with their advisers in which there were regular reviews. In essence that the IFA sector should be restricted to financial planning.

The reality was that the vast majority of clients were transactional and wanted a once off or a once in a while advisory event or the solution of a specific issue. They did not seek regular connection. At the same time RDR sought to make all advisory firms the same and restrict their activities and the accessibility of advice

Post RDR - adviser firms had all the same qualifications and were trading in the same market using the same basic business model. So now advisers have difficulty distinguishing themselves from the competition.

Q6: Is the FCA Consumer Spotlight segmentation model useful for exploring consumers’ advice needs?

No appears to be a complete waste of money unless you are a regulator seeking to increase your empire

# Q7: Do you have any observation on the segments and whether any should be the subject of particular focus in the Review?

No
# 27. FAIR VALUE OF ASSETS AND LIABILITIES

# (a) Fair value hierarchy

The Group categorises fair value measurements using a fair value hierarchy that is dependent on the valuation inputs used as follows:

– Level 1	– Quoted prices (unadjusted) in active market for identical assets or liabilities that the Group
can access at the measurement date,
– Level 2	– Inputs other that quoted prices included within Level 1 that are observable for the asset
or liability, either directly or indirectly, and
– Level 3	– Unobservable inputs for the asset or liability.

Fair value measurements that use inputs of different hierarchy levels are categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

# (b) Assets and liabilities not carried at fair value but for which fair value is disclosed

Trade and other receivables, trade and other payables, accrued operating expenses and amounts due from/(to) subsidiaries and associates (current)

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values due to their short-term nature.

# Pledged fixed deposit

The carrying amount of pledged fixed deposit closely approximates its fair value as the interest rate of this financial asset approximates its market rate on or at the end of the reporting period.

# (c) Assets and liabilities not carried at fair value and whose carrying amounts are not reasonable approximation of fair value.

# Amounts due from subsidiaries and associates (non-current) and Contract Deposit

The non-current amounts due from subsidiaries and associates have no fixed terms of repayment. Accordingly, the fair values cannot be measured reliably as the timing of e future cash flows cannot be determined.

Contract Deposit has no fixed terms of repayment. Accordingly, the fair values cannot be measured reliably as the Contract Deposit is interest-free.
# 28. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group and the Company is exposed to financial risks arising from its operations and the use of financial instruments. The key risks include credit risk, liquidity risk and foreign currency risk. The Board of Directors reviews and agrees policies and procedures for the management of these risks. The Audit Committee provides independent oversight to the effectiveness of the risk management process. It is, and has been throughout the current and previous financial years, the Group’s policy that no trading in derivatives for speculative purposes shall be undertaken.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

# (a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables, cash and short-term deposits. For other financial assets (including cash and short-term deposits), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. In addition, receivable balances are monitored on an ongoing basis.

# Excessive risk concentration

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographic region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Group’s performance to developments affecting a particular industry.

In order to avoid excessive concentrations of risk, the Group’s policies and procedures include specific guidelines to focus on maintaining a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly. Selective hedging is used within the Group to manage risk concentrations at both the relationship and industry levels. The Group does not apply hedge accounting.

# Exposure to credit risk

At the end of the reporting period, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position.

Information regarding credit enhancements for trade and other receivables is disclosed in Note 16.
• authorise the Company to place HKSCC Nominees name on the Company’s register of members as the holder of the Hong Kong Offer Shares allocated to you and to send Share certificate(s) and/or refund monies under the arrangements separately agreed between us and HKSCC;

• confirm that you have read the terms and conditions and application procedures set out in this prospectus and agree to be bound by them;

• confirm that you have received and read a copy of this prospectus and have relied only on the information and representations in this prospectus in causing the application to be made, save as set out in any supplement to this prospectus;

• agree that none of the Company or the Relevant Persons is or will be liable for any information and representations not contained in this prospectus (and any supplement to it);

• agree to disclose to the Company, the Hong Kong Share Registrar, the receiving bank and the Relevant Persons any personal data which they may require about you;

• agree (without prejudice to any other rights which you may have) that once HKSCC Nominees application has been accepted, it cannot be rescinded for innocent misrepresentation;

• agree that any application made by HKSCC Nominees on your behalf is irrevocable on or before the fifth day after the time of the opening of the application lists (excluding any day which is a Saturday, Sunday or public holiday in Hong Kong), such agreement to take effect as a collateral contract with the Company, and to become binding when you give the instructions and such collateral contract to be in consideration of the Company agreeing that it will not offer any Hong Kong Offer Shares to any person on or before the fifth day after the time of the opening of the application lists (excluding any day which is a Saturday, Sunday or public holiday in Hong Kong), except by means of one of the procedures referred to in this prospectus. However, HKSCC Nominees may revoke the application on or before the fifth day after the time of the opening of the application lists (excluding for this purpose any day which is a Saturday, Sunday or public holiday in Hong Kong) if a person responsible for this prospectus under Section 40 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance gives a public notice under that section which excludes or limits that person’s responsibility for this prospectus;

• agree that once HKSCC Nominees’ application is accepted, neither that application nor your electronic application instructions can be revoked, and that acceptance of that application will be evidenced by the Company’s announcement of the results of the Hong Kong Public Offering;
• agree to the arrangements, undertakings and warranties under the participant agreement between you and HKSCC, read with the General Rules of CCASS and the CCASS Operational Procedures, for giving electronic application instructions to apply for Hong Kong Offer Shares;

• agree with the Company, for itself and for the benefit of each Shareholder (and so that the Company will be deemed by its acceptance in whole or in part of the application by HKSCC Nominees to have agreed, for itself and on behalf of each of the Shareholders, with each CCASS Participant giving electronic application instructions) to observe and comply with the Companies Ordinance, the Companies (Winding Up and Miscellaneous Provisions) Ordinance and the Articles of Association; and

• agree that your application, any acceptance of it and the resulting contract will be governed by and construed in accordance with the Laws of Hong Kong.

# Effect of Giving Electronic Application Instructions to HKSCC via CCASS

By giving electronic application instructions to HKSCC or instructing your broker or custodian who is a CCASS Clearing Participant or a CCASS Custodian Participant to give such instructions to HKSCC, you (and, if you arej oint applicants, each of youj ointly and severally) are deemed to have done the following things. Neither HKSCC nor HKSCC Nominees shall be liable to the Company or any other person in respect of the things mentioned below:

• instructed and authorised HKSCC to cause HKSCC Nominees (acting as nominee for the relevant CCASS Participants) to apply for the Hong Kong Offer Shares on your behalf;

• instructed and authorised HKSCC to arrange payment of the Maximum Offer Price, brokerage, SFC transaction levy and the Stock Exchange trading fee by debiting your designated bank account and, in the case of a wholly or partially unsuccessful application and/or if the Offer Price is less than the Maximum Offer Price per Offer Share initially paid on application, refund of the application monies (including brokerage, SFC transaction levy and the Stock Exchange trading fee) by crediting your designated bank account; and

• instructed and authorised HKSCC to cause HKSCC Nominees to do on your behalf all the things stated in the WHITE Application Form and in this prospectus.

# Minimum Purchase Am ount and Permitted Numbers

You may give or cause your broker or custodian who is a CCASS Clearing Participant or a CCASS Custodian Participant to give electronic application instructions for a minimum of 200 Hong Kong Offer Shares. Instructions for more than 200 Hong Kong Offer Shares must be in one of the numbers set out in the table in the Application Forms. No application for any other number of Hong Kong Offer Shares will be considered and any such application is liable to be rejected.