IMPORTANT NOTICE

NOT FOR DISTRIBUTION INTO OR WITHIN THE UNITED STATES OR, IN RESPECT
OF ANY OFFERING OF SECURITIES UNDER CATEGORY 2 OF REGULATION S OF
THE SECURITIES ACT, TO ANY U.S. PERSON OR TO ANY PERSON OR ADDRESS IN
THE UNITED STATES

IMPORTANT: You must read the following before continuing. The following applies to the offering
circular following this page (the “offering circular”), and you are therefore advised to read this carefully
before reading, accessing or making any other use of the offering circular. In accessing the offering
circular, you agree to be bound by the following terms and conditions, including any modifications to
them any time you receive any information from us as a result of such access.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES

FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL
TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND
THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR, IN
RESPECT OF ANY OFFERING OF SECURITIES UNDER CATEGORY 2 OF REGULATION S OF THE
SECURITIES ACT, TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT), EXCEPT PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS.

THIS OFFERING CIRCULAR MAY NOT BE DOWNLOADED, FORWARDED OR DISTRIBUTED IN

WHOLE OR IN PART TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY
MANNER WHATSOEVER, AND IN PARTICULAR, MAY NOT BE FORWARDED TO ANY US
ADDRESS. ANY DOWNLOADING, FORWARDING, DISTRIBUTION OR REPRODUCTION OF
THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH
THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE
APPLICABLE LAWS OF OTHER JURISDICTIONS. IF YOU HAVE GAINED ACCESS TO THIS
TRANSMISSION CONTRARY TO ANY OF THE FOREGOING RESTRICTIONS, YOU ARE NOT
AUTHORISED AND WILL NOT BE ABLE TO PURCHASE ANY OF THE SECURITIES DESCRIBED
HEREIN.

Confirmation of your Representation: This offering circular is being sent at your request and by
accepting the e-mail and accessing this offering circular, you shall be deemed to have represented to us
that the electronic mail address that you gave us and to which this e-mail has been delivered is not located
in the United States and that you consent to delivery of such offering circular by electronic transmission.

You are reminded that this offering circular has been delivered to you on the basis that you are a person
into whose possession this offering circular may be lawfully delivered in accordance with the laws of the
jurisdiction in which you are located and you may not, nor are you authorised to, deliver this offering
circular to any other person. You should not reply by e-mail to this notice, and you may not purchase any
securities by doing so. Any reply e-mail communications, including those you generate by using the
“Reply” function on your e-mail software, will be ignored or rejected.

The materials relating to the offering of securities to which this offering circular relates do not constitute,
and may not be used in connection with, an offer or solicitation in any place where offers or solicitations
are not permitted by law. If a jurisdiction requires that the offering be made by a licensed broker or dealer
and the underwriters or any affiliate of the underwriters is a licensed broker or dealer in that jurisdiction,
the offering shall be deemed to be made by the underwriters or such affiliate on behalf of the Issuer (as
defined in this offering circular) in such jurisdiction.

This offering circular has been sent to you in an electronic form. You are reminded that documents
transmitted via this medium may be altered or changed during the process of electronic transmission and
consequently none of The Hongkong and Shanghai Banking Corporation Limited (the “Arranger”), the
Dealers (as defined in this offering circular), any person who controls the Arranger or any Dealer, or any
director, officer, employee or agent of the Arranger or any of the Dealers, or affiliate of any such person
accepts any liability or responsibility whatsoever in respect of any difference between this offering
circular distributed to you in electronic format and the hard copy version available to you on request from
the Arranger and the Dealers.

You are responsible for protecting against viruses and other destructive items. Your use of this e-mail is at
your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and
other items of a destructive nature.
Offering Circular dated 31 July 2020

NAN FUNG TREASURY LIMITED

(incorporated with limited liability in the British Virgin Islands)

U.S.$3,000,000,000
Medium Term Note Programme
Unconditionally and Irrevocably Guaranteed by

NAN FUNG INTERNATIONAL HOLDINGS LIMITED

(incorporated with limited liability in the British Virgin Islands)

On 14 August 2012, Nan Fung Treasury Limited (the “Issuer”) established a US$1,000,000,000 Medium Term Note Programme (the “Programme”)
and issued an offering circular on that date describing the Programme. On 14 August 2013, the Issuer increased the aggregate nominal amount of
Notes that may be outstanding under the Programme from US$1,000,000,000 to US$2,000,000,000, which was further increased to US$3,000,000,000
on 24 August 2018.

Under the Programme, the Issuer, subject to compliance with all relevant laws, regulations and directives, may from time to time issue medium term
notes (the “Notes”) unconditionally and irrevocably guaranteed (the “Guarantee”) by Nan Fung International Holdings Limited (“Nan Fung” or the
“Guarantor”). The aggregate nominal amount of Notes outstanding will not at any time exceed US$3,000,000,000 (or its equivalent in other
currencies), subject to increase as described herein.

Application will be made to the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for the listing and quotation for any Notes that may
be issued pursuant to the Programme and which are agreed at the time of issue thereof to be so listed on the SGX-ST. Such permission will be granted
when such Notes have been admitted to the Official List of the SGX-ST. Unlisted series of Notes may also be issued pursuant to the Programme. The
relevant Pricing Supplement (as defined herein) in respect of any series of Notes will specify whether or not such Notes will be listed on the SGX-ST
(or any other stock exchange). There is no assurance that the application to the SGX-ST to list a particular series of Notes will be approved. The
SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions expressed or reports contained in this Offering
Circular. Admission of any Notes to the Official List of the SGX-ST is not to be taken as an indication of the merits of the Programme, the Notes, the
Guarantee, the Issuer, the Guarantor, its subsidiaries and/or its associated companies. Investors are advised to read and understand the contents of this
document before investing. If in doubt, investors should consult their advisers.

The Notes and the Guarantee have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities
Act”) or with any securities regulatory authority of any state or other jurisdiction of the United States, and the Notes may include Bearer Notes (as
defined herein) that are subject to U.S. tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold, or, in the case of Bearer
Notes, delivered within the United States or, in the case of Notes being offered or sold in reliance on Category 2 of Regulation S of the Securities Act,
to, or for the account or the benefit of U.S. persons unless an exemption from the registration requirement of the Securities Act is available and in
accordance with all applicable securities laws of any state of the United States and any other jurisdiction. Registered Notes are subject to certain
restrictions on transfer, see “Subscription and Sale”.

The Notes of each Series issued in bearer form (“Bearer Notes”) will be represented on issue by a temporary global note in bearer form (each a
“Temporary Bearer Global Note”) or a permanent global note in bearer form (each a “Permanent Bearer Global Note”). Notes in registered form
(“Registered Notes”) will be represented by a global note in registered form (each a “Registered Global Note” and together with any Temporary
Bearer Global Notes and Permanent Bearer Global Notes, the “Global Notes”), one Registered Global Note being issued in respect of each
Noteholder’s entire holding of Notes in registered form of one Series. Global Notes may be deposited on the relevant issue date with a common
depositary on behalf of Euroclear Bank SA/NV (“Euroclear”) and/or Clearstream Banking S.A. (“Clearstream, Luxembourg”), or with a
sub-custodian for the Central Moneymarkets Unit Service (“CMU”) operated by the Hong Kong Monetary Authority. The provisions governing the
exchange of interests in Global Notes for other Global Notes and definitive Notes are described in “Form of the Notes”.

The Notes may be issued on a continuing basis to one or more of the Dealers specified under “Summary of the Programme” and any additional Dealer
appointed under the Programme from time to time by the Issuer (each a “Dealer” and together the “Dealers”), which appointment may be for a specific
issue or on an ongoing basis. References in this Offering Circular to the “relevant Dealer” shall, in the case of an issue of Notes being (or intended
to be) subscribed by more than one Dealer, be to all Dealers agreeing to subscribe such Notes.

The Programme has been rated “Baa3” by Moody’s Investors Service Hong Kong Ltd. (“Moody’s”), “BBB-” by Fitch Ratings Ltd. (“Fitch”) and
“BBB-” by S&P Global Ratings (“S&P”). Tranches of Notes (as defined in “Summary of the Programme”) to be issued under the Programme will be
rated or unrated. Where a Tranche of Notes is to be rated, such rating will not necessarily be the same as the ratings assigned to the Programme. A
rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, change or withdrawal at any time.

Prospective investors should have regard to the factors described under the section headed “Risk Factors” in this Offering Circular.

Arranger

HSBC
Dealers

Agricultural Bank of China Limited Hong Kong Branch Bank of China

BNP PARIBAS BofA Securities
Credit Suisse Citigroup
Deutsche Bank DBS Bank Ltd.
HSBC Goldman Sachs (Asia) L.L.C.
J.P. Morgan ICBC (Asia)
Standard Chartered Bank Morgan Stanley
UBS
Each of the Issuer and the Guarantor, having made all reasonable enquiries, confirms that to the best of
their knowledge and belief (i) this Offering Circular contains all material information with respect to the
Issuer, the Guarantor and the Guarantor’s subsidiaries taken as a whole (the Guarantor and its
subsidiaries collectively, the “Group”), and to the Notes, (ii) all statements of fact relating to the Issuer,
the Guarantor, the Group and to the Notes contained in this Offering Circular are in every material
particular true and accurate and not misleading in any material respect, and that there are no other facts in
relation to the Issuer, the Guarantor, the Group and to the Notes the omission of which would in the
context of the issue of the Notes make any statement in this Offering Circular misleading in any material
respect, (iii) the statements of intention, opinion, belief or expectation with regard to the Issuer, the
Guarantor and the Group contained in this Offering Circular are honestly made or held and have been
reached after considering all relevant circumstances and have been based on reasonable assumptions, and
(iv) all reasonable enquiries have been made by the Issuer and the Guarantor to ascertain such facts and
to verify the accuracy of all such statements.

Each Tranche (as defined in “Summary of the Programme”) of Notes will be issued on the terms set out
herein under “Terms and Conditions of the Notes” (the “Conditions”) as amended and/or supplemented
by a document specific to such Tranche called a pricing supplement (the “Pricing Supplement”). This
Offering Circular must be read and construed together with any amendments or supplements hereto and
with any information incorporated by reference herein and, in relation to any Tranche of Notes, must be
read and construed together with the relevant Pricing Supplement. This Offering Circular shall be read
and construed on the basis that such documents are incorporated in and form part of this Offering
Circular.

The distribution of this Offering Circular and any Pricing Supplement and the offering, sale and delivery
of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Offering
Circular comes are required by the Issuer, the Guarantor, the Arranger, the Dealers and the Trustee to
inform themselves about and to observe any such restrictions. None of the Issuer, the Guarantor, the
Arranger, the Dealers or the Trustee represents that this Offering Circular or any Pricing Supplement may
be lawfully distributed, or that any Notes may be lawfully offered, in compliance with any applicable
registration or other requirements in any such jurisdiction, or pursuant to an exemption available
thereunder, or assumes any responsibility for facilitating any such distribution or offering. In particular,
no action is being taken to permit a public offering of the Notes or the distribution of this Offering
Circular or any Pricing Supplement in any jurisdiction where action would be required for such purposes.
Accordingly, no Notes may be offered or sold, directly or indirectly, and none of this Offering Circular,
any Pricing Supplement or any advertisement or other offering material may be distributed or published
in any jurisdiction, except under circumstances that will result in compliance with any applicable laws
and regulations.

Singapore SFA Product Classification: In connection with Section 309B of the Securities and Futures
Act (Chapter 289) of Singapore, as amended or modified from time to time (the “SFA”) and the Securities
and Futures (Capital Markets Products) Regulations 2018 of Singapore (the “CMP Regulations 2018”),
unless otherwise specified before an offer of Notes, the Issuer has determined, and hereby notifies all
relevant persons (as defined in Section 309A(1) of the SFA), that the Notes are ‘prescribed capital
markets products’ (as defined in the CMP Regulations 2018) and Excluded Investment Products (as
defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16:
Notice on Recommendations on Investment Products).

There are restrictions on the offer and sale of the Notes, and the circulation of documents relating thereto,
in certain jurisdictions and to persons connected therewith. For a description of certain further
restrictions on offers, sales and resales of the Notes and distribution of this Offering Circular and any
Pricing Supplement, see “Subscription and Sale”.

No person has been authorised by the Issuer and the Guarantor to give any information or to make any
representation other than those contained in this Offering Circular or any other document entered into in
relation to the Programme and the sale of Notes and, if given or made, such information or representation
should not be relied upon as having been authorised by the Issuer, the Guarantor, the Arranger, any
Dealer, the Trustee or any Agent. Neither the delivery of this Offering Circular or any Pricing Supplement

i
nor any offering, sale or delivery made in connection with the issue of the Notes shall, under any
circumstances, constitute a representation that there has been no change or development reasonably
likely to involve a change in the affairs of the Issuer, the Guarantor, the Group or any of them since the
date hereof or the date upon which this Offering Circular has been most recently amended or
supplemented or create any implication that the information contained herein is correct as at any date
subsequent to the date hereof or the date upon which this Offering Circular has been most recently
amended or supplemented or that any other information supplied in connection with the Programme is
correct as of any time subsequent to the date on which it is supplied or, if different, the date indicated in
the document containing the same.

MiFID II product governance/target market — The Pricing Supplement in respect of any Notes may
include a legend entitled “MiFID II Product Governance” which will outline the target market assessment
in respect of the Notes and which channels for distribution of the Notes are appropriate. Any person
subsequently offering, selling or recommending the Notes (a “distributor”) should take into
consideration the target market assessment; however, a distributor subject to Directive 2014/65/EU (as
amended, “MiFID II”) is responsible for undertaking its own target market assessment in respect of the
Notes (by either adopting or refining the target market assessment) and determining appropriate
distribution channels. A determination will be made in relation to each issue about whether, for the
purpose of the MiFID Product Governance rules under EU Delegated Directive 2017/593 (the “MiFID
Product Governance Rules”), any Dealer subscribing for any Notes is a manufacturer in respect of such
Notes, but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will be a
manufacturer for the purpose of the MiFID Product Governance Rules.

PROHIBITION OF SALES TO EEA AND UK RETAIL INVESTORS — The Notes are not intended
to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made
available to any retail investor in the European Economic Area (“EEA”) or in the United Kingdom
(“UK”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as
defined in point (11) of Article 4(1) of Directive 2014/65/EU (“MiFID II”); (ii) a customer within the
meaning of Directive (EU) 2016/97 (“IDD”), where that customer would not qualify as a professional
client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in
Regulation (EU) 2017/1129 (the “Prospectus Regulation”). Consequently no key information document
required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or
selling the Notes or otherwise making them available to retail investors in the EEA or in the UK has been
prepared and therefore offering or selling the Notes or otherwise making them available to any retail
investor in the EEA or in the UK may be unlawful under the PRIIPs Regulation.

This Offering Circular does not constitute an offer of, or an invitation by or on behalf of the Issuer, the
Guarantor, the Arranger, the Dealers, the Trustee or the Agents to subscribe for or purchase any Notes and
may not be used for the purpose of an offer to, or a solicitation by, anyone in any jurisdiction or in any
circumstances in which such offer or solicitation is not authorised or is unlawful.

The Arranger, the Dealers, the Trustee and the Agents have not independently verified any of the
information contained in this Offering Circular and can give no assurance that this information is
accurate, truthful or complete. Accordingly no representation or warranty or undertaking, express or
implied, is made or given and no responsibility or liability is accepted by the Arranger, the Dealers, the
Trustee or the Agents as to the accuracy, completeness or sufficiency of the information contained or
incorporated in this Offering Circular or any other information provided by the Issuer or the Guarantor in
connection with the Programme, and nothing contained or incorporated in this Offering Circular is, or
shall be relied upon as, a promise, representation or warranty by the Arranger, the Dealers, the Trustee or
the Agents. Neither this Offering Circular nor any other information supplied in connection with the
Programme or any Notes (i) is intended to provide the basis of any credit or other evaluation or (ii) should
be considered as a recommendation by the Issuer, the Guarantor, the Arranger, any of the Dealers, the
Trustee or any of the Agents that any recipient of this Offering Circular should purchase any Notes. Each
potential purchaser of Notes should determine for itself the relevance of the information contained in this
Offering Circular and its purchase of Notes should be based upon such investigations with its own tax,
legal and business advisers as it deems necessary.

To the fullest extent permitted by law, none of the Arranger, the Dealers, the Trustee, the Agents or any of
their respective affiliates or advisors accepts any responsibility for the contents of this Offering Circular

ii
or any statement made or purported to be made by the Arranger, the Dealers, the Trustee, the Agents or
any of their respective affiliates or advisors or any of their behalf in connection with the Issuer, the
Guarantor, the Group or the issue and offering of the Notes. Each of the Arranger, the Dealers, the
Trustee, the Agents and their respective affiliates and advisors accordingly disclaims all and any liability
whether arising in tort or contract or otherwise which it might otherwise have in respect of this Offering
Circular or any such statement. None of the Arranger, the Dealers, the Trustee, the Agents or any of their
respective affiliates or advisors undertakes to review the financial condition or affairs of the Issuer, the
Guarantor or the Group for so long as the Notes remain outstanding nor to advise any investor or potential
investor of the Notes of any information coming to the attention of any of the Arranger, the Dealers, the
Trustee, the Agents or their respective affiliates or advisors.

If a jurisdiction requires that an offering of Notes be made by a licensed broker or dealer and the Dealers
or any affiliate of the Dealers is a licensed broker or dealer in that jurisdiction, such offering shall be
deemed to be made by the Dealers or such affiliate on behalf of the Issuer or the Guarantor in such
jurisdiction.

Unless otherwise specified or the context requires, references herein to “Hong Kong” are to the Hong
Kong Special Administrative Region of the People’s Republic of China, to the “PRC” are to the People’s
Republic of China excluding Hong Kong, the Macau Special Administrative Region of the PRC and
Taiwan, to “Hong Kong dollars”, “HK dollars” and “HK$” are to the lawful currency of Hong Kong, to
“U.S. dollars” or “US$” are to the lawful currency of the United States of America, references herein to
“Renminbi”, “RMB” or “CNY” are to the lawful currency of the PRC, to “sterling” or “£” are to the
currency of the United Kingdom, to “euro” or “€” are to the lawful currency of member states of the
European Union (the “EU”) that adopt the single currency introduced in accordance with the Treaty
establishing the European Community, as amended from time to time, to “S$” or “SGD” are to the lawful
currency of Singapore, and to “IFRS” are to International Financial Reporting Standards issued by the
International Accounting Standards Board (“IASB”).

The Guarantor has prepared audited consolidated financial statements as of and for the year ended 31
March 2020, which were prepared in conformity with IFRS.

In this Offering Circular, where information has been presented in thousands or millions of units, or as
percentages, amounts may have been rounded up or down. Accordingly, totals of columns or rows of
numbers in tables may not be equal to the apparent total of the individual items and actual numbers may
differ from those contained herein due to rounding. References to information in billions of units are to
the equivalent of a thousand million units.

This Offering Circular contains certain information regarding the Group’s Adjusted EBITDA. “Adjusted
EBITDA” is defined as profit before income tax but excludes (i) net change in fair values of investment
properties; (ii) depreciation of property, plant and equipment; (iii) amortisation of land use rights; (iv)
finance income, net; and (v) “Other income and gains, net” (except for (a) realised gain on financial
assets at fair value through profit or loss; and (b) realised gain on derivatives. Adjusted EBITDA is not a
standard measure under IFRS. Adjusted EBITDA is a widely used financial indicators of a company’s
ability to service and incur debt. Adjusted EBITDA should not be considered in isolation or construed as
an alternative to cash flows, profit for the year or any other measure of financial performance or as an
indicator of the Group’s operating performance, liquidity, profitability or cash flows generated by
operating, investing or financing activities. In evaluating Adjusted EBITDA, investors should consider,
among other things, the components of Adjusted EBITDA such as turnover and operating expenses and
the amount by which Adjusted EBITDA exceeds capital expenditures and other charges. The Group has
included Adjusted EBITDA because it believes it is a useful supplement to cash flow data as a measure of
the Group’s performance and its ability to generate cash flow from operations to cover debt service and
taxes. Adjusted EBITDA presented herein may not be comparable to similarly titled measures presented
by other companies. Investors should not compare the Group’s Adjusted EBITDA to EBITDA presented
by other companies because not all companies use the same definition.

iii
IN CONNECTION WITH THE ISSUE OF ANY TRANCHE OF NOTES, THE DEALER OR
DEALERS (IF ANY) NAMED AS THE STABILISATION MANAGER(S) (OR ANY PERSON(S)
ACTING FOR IT) (THE “STABILISATION MANAGER(S)”) IN THE APPLICABLE PRICING
SUPPLEMENT MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO
SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT
WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, STABILISATION MAY NOT
NECESSARILY OCCUR. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE
DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF
THE RELEVANT TRANCHE OF NOTES IS MADE AND, IF BEGUN, MAY CEASE AT ANY TIME
AND MUST BE BROUGHT TO AN END NO LATER THAN THE EARLIER OF 30 DAYS AFTER
THE ISSUE DATE OF THE RELEVANT TRANCHE OF THE NOTES AND 60 DAYS AFTER THE
DATE OF THE ALLOTMENT OF THE RELEVANT TRANCHE OF THE NOTES. ANY
STABILISATION ACTION OR OVERALLOTMENT MUST BE CONDUCTED IN ACCORDANCE
WITH ALL APPLICABLE LAWS, REGULATIONS AND RULES.

iv
 SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

Certain statements under “Risk Factors”, “Description of the Group” and elsewhere in this Offering
Circular constitute “forward-looking statements”. The words including “believe”, “expect”, “plan”,
“anticipate”, “schedule”, “estimate” and similar words or expressions identify forward-looking
statements. In addition, all statements other than statements of historical facts included in this Offering
Circular, including, but without limitation, those regarding the financial position, business strategy,
prospects, capital expenditure and investment plans of the Group and the plans and objectives of the
Group’s management for its future operations (including development plans and objectives relating to the
Group’s operations), are forward looking statements. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause actual results or performance of the
Group to differ materially from those expressed or implied by such forward-looking statements. Such
forward-looking statements are based on numerous assumptions regarding the Group’s present and future
business strategies and the environment in which the Group will operate in the future. Each of the Issuer
and the Guarantor expressly disclaims any obligation or undertaking to release any updates or revisions to
any forward-looking statements contained herein to reflect any change in the Issuer’s, the Guarantor’s or
the Group’s expectations with regard thereto or any change of events, conditions or circumstances, on
which any such statements were based. This Offering Circular discloses, under “Risk Factors” and
elsewhere, important factors that could cause actual results to differ materially from the Issuer’s or the
Guarantor’s expectations. All subsequent written and forward-looking statements attributable to the
Issuer or the Guarantor or persons acting on behalf of the Issuer or the Guarantor are expressly qualified
in their entirety by such cautionary statements.

v
 DOCUMENTS INCORPORATED BY REFERENCE

This Offering Circular should be read and construed in conjunction with:

(i) each relevant Pricing Supplement;

(ii) all amendments and supplements from time to time to this Offering Circular; and

(iii) any annual or interim financial statements (whether audited or unaudited) of the Guarantor that are
appended to or circulated with this Offering Circular and are dated as at a date, or for a period
ending, subsequent to those financial statements appearing elsewhere in this Offering Circular,

which shall be deemed to be incorporated in, and to form part of, this Offering Circular and which shall
be deemed to modify or supersede the contents of this Offering Circular to the extent that a statement
contained in any such document is inconsistent with such contents.

Any unaudited financial statements should not be relied upon to provide the same quality of information
associated with information that has been subject to an audit nor taken as an indication of the expected
financial condition and results of operations of the Guarantor for the relevant full financial year. Potential
investors must exercise caution when using such data to evaluate the Guarantor’s financial condition,
results of operations and results.

Copies of all such documents which are so deemed to be incorporated in, and to form part of, this
Offering Circular will be available free of charge during usual business hours on any weekday (Saturdays,
Sundays and public holidays excepted) from the specified office of the Trustee set out at the end of this
Offering Circular. Copies of the documents listed under paragraph (iii) above incorporated by reference
in this Offering Circular are available on the website of the SGX-ST at www.sgx.com.

vi
 SUPPLEMENTAL OFFERING CIRCULAR

Each of the Issuer and the Guarantor has given an undertaking to the Dealers that in the event of (i) a
significant new factor, material mistake or inaccuracy relating to information included in this Offering
Circular which is capable of affecting the assessment of the Notes arising or being noted, (ii) a change in
the condition of the Issuer and/or the Guarantor which is material in the context of the Programme or the
issue of any Notes or (iii) this Offering Circular otherwise coming to contain an untrue statement of a
material fact or omitting to state a material fact necessary to make the statements contained therein not
misleading or if it is necessary at any time to amend this Offering Circular to comply with, or reflect
changes in, the laws or regulations of the British Virgin Islands or any other relevant jurisdiction, the
Issuer and the Guarantor shall update or amend this Offering Circular (following consultation with the
Dealers and the relevant Dealer (if any)) by the publication of a supplement to it or a new Offering
Circular, in each case in a form approved by the Dealers.

vii
 TABLE OF CONTENTS

Page

SUMMARY OF THE PROGRAMME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

SUMMARY FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

FORM OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

FORM OF PRICING SUPPLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

TERMS AND CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

DESCRIPTION OF THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

DESCRIPTION OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132

SHAREHOLDERS, DIRECTORS’ INTERESTS AND RELATED PARTY TRANSACTIONS . 139

BOOK-ENTRY CLEARANCE SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140

TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

REMITTANCE OF RENMINBI INTO AND OUTSIDE THE PRC . . . . . . . . . . . . . . . . . . . . 146

SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149

GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

viii
 SUMMARY OF THE PROGRAMME

The following summary is qualified in its entirety by the remainder of this Offering Circular. This
summary must be read as an introduction to this Offering Circular and any decision to invest in the Notes
should be based on a consideration of the Offering Circular as a whole, including any information
incorporated by reference. Phrases used in this summary and not otherwise defined shall have the
meanings given to them in “Terms and Conditions of the Notes”.

Issuer . . . . . . . . . . . . . . . . . . . . . Nan Fung Treasury Limited.

Issuer Legal Entity Identifier 254900S3BMA32ATT9Q05

(LEI) . . . . . . . . . . . . . . . . . . . .

Guarantor . . . . . . . . . . . . . . . . . . Nan Fung International Holdings Limited.

Description . . . . . . . . . . . . . . . . . Medium Term Note Programme.

Size . . . . . . . . . . . . . . . . . . . . . . . Up to US$3,000,000,000 (or the equivalent in other currencies at

the date of issue) aggregate nominal amount of Notes outstanding
at any one time. The Issuer and the Guarantor may increase the
aggregate nominal amount of the Programme in accordance with
the terms of the Programme Agreement.

Arranger . . . . . . . . . . . . . . . . . . . The Hongkong and Shanghai Banking Corporation Limited.

Dealers . . . . . . . . . . . . . . . . . . . . Agricultural Bank of China Limited Hong Kong Branch

Bank of China (Hong Kong) Limited
BNP Paribas
BOCI Asia Limited
Citigroup Global Markets Limited
Credit Suisse (Hong Kong) Limited
DBS Bank Ltd.
Deutsche Bank AG, Hong Kong Branch
Goldman Sachs (Asia) L.L.C.
The Hongkong and Shanghai Banking Corporation Limited
Industrial and Commercial Bank of China (Asia) Limited
J.P. Morgan Securities plc
Merrill Lynch (Asia Pacific) Limited
Morgan Stanley & Co. International plc
Standard Chartered Bank
UBS AG Hong Kong Branch

The Issuer and the Guarantor may from time to time terminate the
appointment of any dealer under the Programme or appoint
dealers either in respect of one or more Tranches or in respect of
the whole Programme. References in this Offering Circular to
“Dealers” are to all persons appointed as a dealer in respect of one
or more Tranches or the Programme.

1
Certain Restrictions . . . . . . . . . . Each issue of Notes denominated in a currency in respect of
which particular laws, guidelines, regulations, restrictions or
reporting requirements apply will only be issued in circumstances
which comply with such laws, guidelines, regulations,
restrictions or reporting requirements from time to time (see
“Subscription and Sale”) including the following restriction
applicable at the date of this Offering Circular.

Notes having a maturity of less than one year

Notes having a maturity of less than one year will, if the proceeds
of the issue are accepted in the United Kingdom, constitute
deposits for the purposes of the prohibition on accepting deposits
contained in section 19 of the Financial Services and Markets Act
2000 (“FSMA”) unless they are issued to a limited class of
professional investors and have a denomination of at least
£100,000 or its equivalent, see “Subscription and Sale”.

Trustee . . . . . . . . . . . . . . . . . . . . The Hongkong and Shanghai Banking Corporation Limited.

Principal Paying Agent, Paying The Hongkong and Shanghai Banking Corporation Limited.
Agent, CMU Lodging Agent,
Registrar and Transfer Agent . .

Method of Issue . . . . . . . . . . . . . . The Notes will be issued on a syndicated or non-syndicated basis.

The Notes will be issued in series (each a “Series”) having one or
more issue dates and on terms otherwise identical (or identical
other than in respect of the first payment of interest and/or the
issue price), the Notes of each Series being intended to be
interchangeable with all other Notes of that Series. Each Series
may be issued in tranches (each a “Tranche”) on the same or
different issue dates. The specific terms of each Tranche (which
will be completed, where necessary, with the relevant terms and
conditions and, save in respect of the issue date, issue price, first
payment of interest and nominal amount of the Tranche, will be
identical to the terms of other Tranches of the same Series) will be
completed in the pricing supplement (the “Pricing
Supplement”).

Issue Price . . . . . . . . . . . . . . . . . . Notes may be issued at their nominal amount or at a discount or

premium to their nominal amount. Partly Paid Notes may be
issued, the issue price of which will be payable in two or more
instalments.

Form of Notes . . . . . . . . . . . . . . . The Notes will be issued in bearer or registered form as described
in “Form of the Notes”. Registered Notes will not be
exchangeable for Bearer Notes and vice versa.

Clearing Systems . . . . . . . . . . . . . Clearstream, Luxembourg, Euroclear, the CMU and, in relation to

any Tranche, such other clearing system as may be agreed
between the Issuer, the Principal Paying Agent, the Trustee and
the relevant Dealer.

2
Initial Delivery of Notes . . . . . . . On or before the issue date for each Tranche, the Global Note
representing the Notes may be deposited with a common
depositary for Euroclear and Clearstream, Luxembourg or
deposited with a sub-custodian for the CMU. Global Notes may
also be deposited with any other clearing system or may be
delivered outside any clearing system provided that the method of
such delivery has been agreed in advance by the Issuer, the
Trustee, the Principal Paying Agent and the relevant Dealer.
Registered Notes that are to be credited to one or more clearing
systems on issue will be registered in the name of, or in the name
of nominees or a common nominee for, such clearing systems.

Currencies . . . . . . . . . . . . . . . . . . Subject to compliance with all relevant laws, regulations and

directives, Notes may be issued in any currency agreed between
the Issuer, the Guarantor and the relevant Dealers.

Maturities . . . . . . . . . . . . . . . . . . Subject to compliance with all relevant laws, regulations and

directives, any maturity as may be agreed between the Issuer, the
Guarantor and the relevant Dealer(s).

Specified Denomination . . . . . . . . Notes will be issued in such denominations as may be agreed

between the Issuer and the relevant Dealer save that the minimum
denomination of each Note will be such as may be allowed or
required from time to time by the central banks (or equivalent
body) or any laws or regulations applicable to the relevant
currency (see “Certain Restrictions” above).

Fixed Rate Notes . . . . . . . . . . . . . Fixed interest will be payable in arrear on such date or dates as
may be agreed between the Issuer and the relevant Dealer and on
redemption and will be calculated on the basis of such Day Count
Fraction as may be agreed between the Issuer and the relevant
Dealer.

Floating Rate Notes . . . . . . . . . . . Floating Rate Notes will bear interest determined separately for
each Series as follows:

(i) on the same basis as the floating rate under a notional

interest rate swap transaction in the relevant Specified
Currency governed by an agreement incorporating the 2006
ISDA Definitions (as published by the International Swaps
and Derivatives Association, Inc. and as amended and
updated as at the Issue Date of the first Tranche of the Notes
of the relevant Series); or

(ii) by reference to LIBOR, EURIBOR, HIBOR, CNH HIBOR,

SIBOR or SOR (or such other benchmark as may be
specified in the relevant Pricing Supplement) as adjusted for
any applicable margin; or

(iii) on such other basis as may be agreed between the Issuer and
the relevant Dealer.

Interest periods will be specified in the relevant Pricing

Supplement.

3
Zero Coupon Notes . . . . . . . . . . . Zero Coupon Notes (as defined in “Terms and Conditions of the
Notes”) may be issued at their nominal amount or at a discount to
it and will not bear interest.

Dual Currency Notes . . . . . . . . . . Payments (whether in respect of principal or interest and whether
at maturity or otherwise) in respect of Dual Currency Notes (as
defined in “Terms and Conditions of the Notes”) will be made in
such currencies, and based on such rates of exchange as the Issuer
and the relevant Dealer may agree and as may be specified in the
relevant Pricing Supplement.

Index Linked Notes . . . . . . . . . . . Payments of principal in respect of Index Linked Redemption

Notes (as defined in “Terms and Conditions of the Notes”) or of
interest in respect of Index Linked Interest Notes (as defined in
“Terms and Conditions of the Notes”) will be calculated by
reference to such index and/or formula or to changes in prices of
securities or commodities or to such other factors as the Issuer
and the relevant Dealer may agree and as may be specified in the
relevant Pricing Supplement.

Interest Periods and Interest The length of the interest periods for the Notes and the applicable
Rates . . . . . . . . . . . . . . . . . . . . interest rate or its method of calculation may differ from time to
time or be constant for any Series. Floating Rate Notes and Index
Linked Interest Notes may also have a maximum interest rate, a
minimum interest rate, or both. The use of interest accrual periods
permits the Notes to bear interest at different rates in the same
interest period. All such information will be set out in the relevant
Pricing Supplement.

Redemption . . . . . . . . . . . . . . . . . The applicable Pricing Supplement will indicate either that the
relevant Notes cannot be redeemed prior to their stated maturity
(other than in specified instalments, if applicable, or for taxation
reasons or following an Event of Default) or that such Notes will
be redeemable at the option of the Issuer and/or the Noteholders
upon giving notice to the Noteholders or the Issuer, as the case
may be, on a date or dates specified prior to such stated maturity
and at a price or prices and on such other terms as may be agreed
between the Issuer and the relevant Dealer. The applicable Pricing
Supplement may provide that Notes may be redeemable in two or
more instalments of such amounts and on such dates as are
indicated in the applicable Pricing Supplement.

Notes having a maturity of less than one year are subject to

restrictions on their denomination and distribution, see “Certain
Restrictions — Notes having a maturity of less than one year”
above.

Change of Control Redemption . . The terms of the Notes will contain a provision for the early
redemption of the Notes at the option of the holders thereof upon
the occurrence of a Change of Control as further described in
Condition 7.5.

Tax Redemption . . . . . . . . . . . . . Notes will be redeemable at the Issuer’s option prior to maturity
for tax reasons as described in “Terms and Conditions of the Notes
— Redemption and Purchase”.

4
Status of Notes . . . . . . . . . . . . . . The Notes will constitute direct, unconditional, unsubordinated
and (subject to the provisions of Condition 4) unsecured
obligations of the Issuer and will rank pari passu and without any
preference among themselves, with all other outstanding
unsecured and unsubordinated obligations of the Issuer, present
and future, but, in the event of insolvency, only to the extent
permitted by applicable laws relating to creditors’ rights.

Status of the Guarantee . . . . . . . . The obligations of the Guarantor under the Guarantee constitute
direct, unconditional, unsubordinated and (subject to Condition
4) unsecured obligations of the Guarantor and rank at least pari
passu with all other outstanding unsecured and unsubordinated
obligations of the Guarantor, present and future, but, in the event
of insolvency, only to the extent permitted by applicable laws
relating to creditors’ rights.

Negative Pledge . . . . . . . . . . . . . . The Notes will contain a negative pledge provision as described in
Condition 4.

Cross Acceleration . . . . . . . . . . . . The Conditions will contain a cross acceleration provision as

described in Condition 10.

Ratings . . . . . . . . . . . . . . . . . . . . The Programme has been rated “Baa3” by Moody’s, “BBB-” by

Fitch and “BBB-” by S&P.

Tranches of Notes will be rated or unrated. Where a Tranche of

Notes is to be rated, such rating will be specified in the relevant
Pricing Supplement.

A rating is not a recommendation to buy, sell or hold securities

and may be subject to suspension, reduction or withdrawal at any
time by the assigning rating agency.

Withholding Tax . . . . . . . . . . . . . All payments of principal and interest in respect of the Notes will
be made free and clear of withholding taxes imposed by a
Relevant Jurisdiction (as defined in “Terms and Conditions of the
Notes”), unless the withholding is required by law. In that event,
the Issuer or (as the case may be) the Guarantor will (subject to
certain customary exceptions as provided in Condition 8) pay
such additional amounts as will result in the Noteholders
receiving such amounts as they would have received in respect of
such Notes or, as the case may be, the Guarantee, had no such
withholding been required.

Governing Law . . . . . . . . . . . . . . The Notes and the Trust Deed and any non-contractual
obligations arising out of or in connection with the Notes or the
Trust Deed will be governed by, and construed in accordance
with, English law.

5
Listing and Admission to Trading Application will be made to the SGX-ST for the listing and
quotation of any Notes that may be issued pursuant to the
Programme and which are agreed at the time of issue thereof to be
so listed on the SGX-ST. Such permission will be granted when
such Notes have been admitted to the Official List of the SGX-ST.
There is no assurance that the application to the SGX-ST to list a
particular series of Notes will be approved. If the application to
the SGX-ST to list a particular series of Notes is approved, for so
long as any Notes are listed on the SGX-ST and the rules of the
SGX-ST so require, such Notes, if traded, will be traded on the
SGX-ST in a board lot size of at least S$200,000 (or its equivalent
in other currencies).

Unlisted Series of Notes may also be issued pursuant to the

Programme. The Notes may also be listed on such other or further
stock exchange(s) as may be agreed between the Issuer and the
relevant Dealer in relation to each series of Notes. The Pricing
Supplement relating to each Series of Notes will state whether or
not the Notes of such Series will be listed on any stock
exchange(s) and, if so, on which stock exchange(s) the Notes are
to be listed.

Selling Restrictions . . . . . . . . . . . There are restrictions on the offer, sale and transfer of the Notes
in the United States, the European Economic Area (including the
Netherlands and, for these purposes, the United Kingdom), Japan,
Hong Kong, the PRC, Singapore and the British Virgin Islands
and such other restrictions as may be required in connection with
the offering and sale of a particular Tranche of Notes, see
“Subscription and Sale”.

United States Selling Restrictions Regulation S, Category 1 or 2 as specified in the applicable

Pricing Supplement. TEFRA C or D/TEFRA not applicable, as
specified in the applicable Pricing Supplement.

6
 SUMMARY FINANCIAL INFORMATION

The following tables set forth a summary of the consolidated financial information of the Guarantor as at
and for the periods indicated.

The summary consolidated financial information as of and for the years ended 31 March 2020 and 2019
set forth below is derived from the Guarantor’s audited consolidated financial statements as at and for
the year ended 31 March 2020 which have been audited by PricewaterhouseCoopers, Certified Public
Accountants, Hong Kong, and included elsewhere in this Offering Circular.

The summary financial information set out below should be read in conjunction with, and qualified in its
entirety by reference to, the relevant consolidated financial information of the Guarantor, including the
notes thereto, included elsewhere in this Offering Circular.

The Guarantor’s audited consolidated financial statements as at and for the year ended 31 March 2020
were prepared and presented in accordance with IFRS.

In preparing the audited consolidated financial statements as at and for the year ended 31 March 2020,
the Company has adopted IFRS 16 and IAS 28 (Amendment) with effect from 1 April 2019 and has not
restated the audited consolidated financial statements as at and for the year ended 31 March 2019.
Therefore, the audited consolidated financial statements as at and for the year ended 31 March 2020 is
not comparable with the audited consolidated financial statements as at and for the year ended 31 March
2019. For a discussion on the impact on the adoption of IFRS 16 and IAS 28 (Amendment), please refer to
note 2(a)(i) of the audited consolidated financial statements as at and for the year ended 31 March 2020
beginning on page F-14.

7
Consolidated Income Statements

For the year ended 31 March

2020 2019
HK$ ‘000
(Audited)
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,988,845 13,532,369
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,865,482) (8,756,710)
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,123,363 4,775,659
Other income and (losses)/gains, net . . . . . . . . . . . . . . . . . . . . . (454,065) 955,233
Net change in fair values of investment properties . . . . . . . . . . . (417,441) 758,296
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,839,730) (1,843,776)
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,412,127 4,645,412
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 837,837 546,838
Finance expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (301,166) (321,309)
Other finance charges and net exchange difference on financing
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144,326 (58,988)
Finance income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 680,997 166,541
Share of results of
— Joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422,582 1,516,629
— Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,810) 513,050
Profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,499,896 6,841,632
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (217,517) (584,176)
Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,282,379 6,257,456
Profit for the year attributable to:
— Owners of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,024,855 6,023,476
— Holders of perpetual capital securities . . . . . . . . . . . . . . . . . . 214,964 215,657
— Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,560 18,323
2,282,379 6,257,456

8
Consolidated Balance Sheet

As at 31 March
2020 2019
HK$ ‘000
(Audited)
ASSETS
Non-current assets
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 2,193,780 2,878,214
Investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,476,965 69,776,779
Right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 890,468 —
Land use rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 369,220
Joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,200,649 9,326,494
Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,424,382 7,248,354
Financial assets at fair value through profit or loss . . . . . . . . . . . 14,343,838 11,869,326
Loans and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,706,452 4,077,700
Amounts due from investee companies . . . . . . . . . . . . . . . . . . . . 47,578 45,435
Deferred income tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269,159 234,517
114,553,271 105,826,039
Current assets
Properties for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,217,725 15,415,902
Trade and other receivables, deposits and prepayments . . . . . . . . 7,476,291 10,556,408
Financial assets at fair value through profit or loss . . . . . . . . . . . 7,571,789 10,063,720
Prepaid tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143,740 83,580
Cash and bank balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,646,023 17,670,671
46,055,568 53,790,281
Assets classified as held-for-sale . . . . . . . . . . . . . . . . . . . . . . . . 324,370 348,280
46,379,938 54,138,561
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,933,209 159,964,600
EQUITY
Equity attributable to the owners of the Company
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,743,532 62,743,532
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,137,476 38,619,237
100,881,008 101,362,769
Perpetual capital securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,968,568 3,969,456
104,849,576 105,332,225
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322,619 630,651
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,172,195 105,962,876
LIABILITIES
Non-current liabilities
Deferred income tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 3,047,849 3,066,076
Bank and other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,813,367 32,819,740
Lease liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129,834 —
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,842 11,163
32,065,892 35,896,979
Current liabilities
Trade and other payables, deposits and accruals . . . . . . . . . . . . . 13,335,835 13,187,454
Lease liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,184 —
Contract liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,481,073 3,394,433
Financial liabilities at fair value through profit or loss . . . . . . . . 819,385 202,753
Bank and other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,395,580 375,730
Tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 648,065 944,375
23,695,122 18,104,745
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,761,014 54,001,724
Total equity and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,933,209 159,964,600

9
Other Financial Information

As of and/or for the year ended

31 March
2020 2019
HK$ million
(Unaudited)
Adjusted EBITDA (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,409 5,470
Total Debt (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,209 33,195
Total Debt/Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4x 6.1x
Interest expenses (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,216 1,243
Adjusted EBITDA/interest expenses . . . . . . . . . . . . . . . . . . . . . 2.8x 4.4x

Notes:
(1) “Adjusted EBITDA” is defined as profit before income tax but excludes (i) net change in fair values of investment
properties; (ii) depreciation and amortisation of property, plant and equipment, right-of-use assets and land use rights; (iii)
finance income, net; and (iv) “Other income and gains, net” (except for (a) realised gain on financial assets at fair value
through profit or loss and (b) realised gain on derivatives). Adjusted EBITDA is not a standard measure under IFRS. Adjusted
EBITDA is a widely used financial indicator of a company’s ability to service and incur debt. Adjusted EBITDA should not
be considered in isolation or construed as an alternative to cash flows, profit for the year or any other measure of financial
performance or as an indicator of the Group’s operating performance, liquidity, profitability or cash flows generated by
operating, investing or financing activities. In evaluating Adjusted EBITDA, investors should consider, among other things,
the components of Adjusted EBITDA such as turnover and operating expenses and the amount by which Adjusted EBITDA
exceeds capital expenditures and other charges. The Group has included Adjusted EBITDA because it believes it is a useful
supplement to cash flow data as a measure of the Group’s performance and its ability to generate cash flow from operations
to cover debt service and taxes. Adjusted EBITDA presented herein may not be comparable to similarly titled measures
presented by other companies. Investors should not compare the Group’s Adjusted EBITDA to EBITDA presented by other
companies because not all companies use the same definition.
(2) Total Debt is defined as the total of non-current bank borrowings, current bank and other borrowings and guaranteed notes,
excluding perpetual capital securities.
(3) Interest expenses is defined as total finance costs incurred, including interest capitalised in properties under development and
investment properties under development.

10
 RISK FACTORS

Prior to making any investment decision, prospective investors should consider carefully all of the
information in this Offering Circular, including the risks and uncertainties described below. The
business, financial condition or results of operations of the Group could be materially adversely affected
by any of these risks. The Issuer and the Guarantor believe that the following factors may affect their
ability to fulfil their obligations under the Notes issued under the Programme and the Guarantee. All of
these factors are contingencies which may or may not occur and the Issuer and the Guarantor are not in
a position to express a view on the likelihood of any such contingency occurring. Factors which the Issuer
and the Guarantor believe may be material for the purpose of assessing the market risks associated with
the Notes issued under the Programme and the Guarantee are also described below.

The Issuer and the Guarantor believe that the factors described below represent the principal risks
inherent in investing in Notes issued under the Programme, but the inability of the Issuer or the
Guarantor to pay principal, interest (if any) or other amounts or fulfil other obligations on or in
connection with any Notes and the Guarantee may occur for other reasons and the Issuer and the
Guarantor do not represent that the statements below regarding the risks of holding the Notes are
exhaustive.

Risks Relating to the Group

The reporting and disclosure standards applicable to the Guarantor may differ significantly from those
applicable to companies with equity securities listed on a stock exchange

Shares in the Guarantor are not listed on any stock exchange and are closely held (see the section
“Shareholders, Directors’ Interests and Related Party Transactions”). As a result, the Guarantor is not
bound by any continuing obligations similar to those imposed on companies with equity securities listed
on The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) or on other stock
exchanges.

Further, the Guarantor is not bound by any continuing obligation as regards publication of non-public
price sensitive information, major transactions/very substantial transactions or connected transactions,
nor is it subject to any code as regards corporate governance. Although the Issuer will be required to
comply with the continuing obligations of the SGX-ST pursuant to the listing of Notes issued under the
Programme on such exchange for so long as any such Notes are outstanding, the Guarantor cannot
provide any assurance that the level of publicly available information in relation to the Guarantor or the
Group, or the information disclosed by the Guarantor on an ongoing basis, will be equivalent to that
available or disclosed in relation to companies with equity securities listed on the Hong Kong Stock
Exchange or on other stock exchanges.

The Group is highly dependent upon the services of key management personnel

The Group is dependent in part upon the collective services of all of the members of its senior
management team and other qualified and experienced staff. In particular, the Group’s senior
management team has extensive experience, knowledge, business relationships and expertise in the
property development and investment business and therefore may be difficult to replace. Competition for
such employees is intense in the Hong Kong, PRC, the US and the UK markets, and if the Group is unable
to attract, retain and motivate its key personnel, its business, results of operations and financial position
may be materially and adversely affected. The Group has various committees in place, and so is not
reliant on any individual, but any significant change in management may materially and adversely affect
the Group. Moreover, as the Group’s business continues to grow and as it expands into the PRC, the US
and the United Kingdom, it will need to employ, train and retain employees on a much larger
geographical scale. If the Group cannot attract and retain suitable human resources, its business and
prospects will be negatively affected.

11
There are significant related-party transactions by members of the Group

A part of the business undertaken by members of the Group is conducted with the Group’s related
companies and individuals. These transactions include those described under the notes to the Group’s
financial statements and information appearing elsewhere in this Offering Circular (see in particular note
37 to the Guarantor’s audited consolidated financial statements for the year ended 31 March 2020 and
below under “Shareholders, Directors’ Interests and Related Party Transactions”) and include the
provision of loans and guarantees, property development and sale, construction, management, and
marketing, leasing and administrative services. Certain of these transactions are entered into with
members of the Crosby Group. The Group has had a close relationship with the Crosby Group for over 10
years and has entered into certain development projects and investments on a joint venture basis.

The Group expects that members of the Group will continue to enter into transactions with each other as
well as other related companies and individuals. These transactions may involve conflicts of interest,
which, although not contrary to law, may sometimes potentially be detrimental to the Group. In this
regard, the Group operates under a set of guidelines with a Conflicts Committee to manage conflicts of
interest (see below under “Management” and “Shareholders, Directors’ Interests and Related Party
Transactions”) and its policy is to enter into contracts with related parties on commercial terms that
would apply for arm’s length transactions with independent parties. As at 31 March 2020, the amounts
due to related companies and individuals totalled HK$493 million, the amount due to ultimate holding
company totalled HK$210 million and the amount due from an immediate holding company totalled
HK$652 million.

There is no assurance that conflicts of interest will not arise between the Group and its related companies
and individuals, in relation to the Group’s businesses, including business opportunities that may be
attractive to all or some of the various relevant parties. Should any action be taken by related companies
and individuals which is not in the best commercial interests of the Group, or should the Group’s related
companies and individuals seek to enforce repayment of all of the amounts due to them, the Group’s
business and financial condition could be materially and adversely affected.

The indirect beneficial interest in the shares of the Guarantor is currently subject to probate in Hong
Kong and the British Virgin Islands

On 17 June 2012, the Group’s founder, former Chairman and sole shareholder, Dr. Chen Din Hwa passed
away following a long illness. Dr. Chen’s estate, including his 100 per cent. ownership of the ultimate
holding company of the Guarantor, Chen’s Group International Limited (“CGIL”), is currently subject to
probate in Hong Kong and the British Virgin Islands. The Grant of Probate of Will in respect of Hong
Kong was issued by the High Court of Hong Kong on 16 April 2013. The Grant of Probate of Will in
respect of the British Virgin Islands was issued by the High Court of Justice of the British Virgin Islands
on 28 August 2013. The shares in CGIL were transferred into the names of the executors of Dr Chen’s
will, being Ms. Vivien Chen and three solicitors who have advised Dr. Chen and his companies over many
years, on 20 November 2013, and the executors of Dr. Chen’s will, in their capacity as such, will hold the
shares for the benefit of the estate until administration of the estate is completed and a distribution is
made to the beneficiaries under the will. One of the executors passed away in February 2018 and the
shares in CGIL are now registered under the names of the remaining three executors.

As described below under “Shareholders, Directors’ Interests and Related Party Transactions”, the Board
of Directors does not consider that the continuity of day to day management of the Group will be affected
by the passing of Dr. Chen, and does not anticipate any change in the composition of the Board arising
from distribution of the estate to the beneficiaries under Dr. Chen’s will. However, until completion of the
administration of the estate, there can be no guarantee as to the ultimate manner of distribution of Dr.
Chen’s estate nor any guarantee as to whom such distributions will be made. A distribution of Dr. Chen’s
estate in a manner other than as set out in Dr. Chen’s will and/or any material dispute as to the distribution
of the estate, may affect the continuity of day to day management and/or the composition of the Board,
and may materially and adversely affect the Group’s business and financial condition.

12
There is limited publicly available information about the Issuer and the Guarantor

Each of the Issuer and the Guarantor is a business company incorporated under the laws of the British
Virgin Islands and its shares are not traded publicly. Therefore, there may be less publicly available
information about each of the Issuer and the Guarantor than if it were a publicly listed company or
incorporated in other jurisdictions.

The adoption of new accounting standards could have a significant impact on the Group’s businesses,
financial condition, results of operations and growth prospects

The IASB has from time to time issued new and revised IFRS. As accounting standards continue to
develop, the IASB may in the future issue further updated and revised IFRS. As a result, the Group may
be required to adopt new accounting policies which might or could have a significant impact on the
Group’s financial position and results of operations.

The global economy is facing significant uncertainties and disruptions caused by COVID-19.

The Group’s business is subject to global market fluctuations and general economic conditions in Hong
Kong, the PRC and the global economy. Any prolonged downturn, recession or other condition that
adversely affects the Group’s business and economic environment, including the ongoing COVID-19
pandemic, could materially and adversely impact its business, financial condition and results of
operations.

The World Health Organization declared the novel coronavirus (“COVID-19”) to be a global pandemic
on 11 March 2020. The sudden and rapid spread of COVID-19 across the globe covering Asia, North
America, Europe and the Middle East has put pressure on most economies due to disruption of business
activities and weakened sentiment in the consumption and tourism related sectors. The recent plunge in
global oil prices will add to the woes resulting from the pandemic, severely upsetting the economic
growth of most countries which are already on a slow growth trajectory.

The outbreak of COVID-19 in different parts of the world, including places in which the Group operates,
has a significant adverse impact on most economies due to the community standstill, disruption of
business activities, and weakened sentiment in the consumption and tourism related sectors. As the
situation in relation to COVID-19 is still evolving, the heightened uncertainties surrounding the
pandemic may pose a negative impact on the Group’s businesses, financial conditions, results of
operations or growth prospects. There can be no assurance that there will not be another significant global
outbreak of a severe communicable disease, and if such an outbreak were to occur, it may have an impact
on the operations of the Group and its results of operations may suffer.

Governments and central banks around the globe have introduced or are planning fiscal and monetary
stimulus measures including tax cuts, direct subsidies, rates cut, bond repurchase programs and
suspension or relaxation of prudential bank capital requirements. These measures aim to contain the
economic impact of the epidemic, stabilise the markets and provide liquidity easing to the markets. There
is no assurance that such measures may be introduced in time or will be sufficient or effective in
delivering their policy objectives. There is no assurance that these measures will be successful in
containing the economic impact of the epidemic or stabilising the markets.

As a result, the global economy is facing significant uncertainties and the global financial markets are
experiencing significant volatilities. Such volatilities may increase the default risk faced by the Group
with respect to its fixed income investments and negatively impact the share prices of the entities in
which the Group has equity investments in. Any potential economic slowdowns may also negatively
affect the purchasing powers of potential property purchasers, which may lead to a decline in the general
demand for the Group’s properties and erosion of the selling prices of such properties. Moreover,
governments may also impose various monetary and regulatory policies to combat potential economic
slowdowns. Such policies may include measures affecting the property market. If the global financial
markets continue to experience volatility or if the Hong Kong or the Mainland economy continues to slow
down, the Group’s business, financial condition and outlook may be adversely affected. In particular,

13
property sales in Hong Kong and the PRC have slowed due to the COVID-19 pandemic, though end-user
demand has remained for small- to medium-sized units. The COVID-19 pandemic has also impacted both
domestic and tourist spending, with the traffic flow and tenant sales of the Group’s shopping malls in
Hong Kong and the PRC have been under pressure. In response to this, relief initiatives were offered to
tenants in the Group’s shopping malls including the granting of rent concessions.

The progress of the Group’s construction project in the United Kingdom experienced delay due to the
mandatory lockdown imposed by the United Kingdom government in March and April 2020. As of the
date of this Offering Circular, the project has resumed at normal capacity. There can be no assurance that
the Group would not experience further delays in its construction projects due to another significant
global outbreak of a severe communicable disease, and if such an outbreak were to occur, it may have an
adverse impact on the operations of the Group and its results of operations may suffer.

In addition, during the COVID-19 pandemic and the corresponding quarantine and traffic-flow control
measures adopted by the Hong Kong government, the Group’s hotel business could be vulnerable to
reduced business travel, decreased consumer spending and reduced disposable income, all of which may
result in reduced demand for hotel rooms and downward pressure on the Group’s daily room rates. There
can be no assurance that the economies of the jurisdictions in which the Group operates will improve or
that hotel property values and rates will not decline or that interest rates will not rise in the future. A
decline in the hotel and serviced suite industry could have an adverse effect on the Group’s hotel business
and therefore may materially and adversely impact on the Group’s businesses, financial conditions,
results of operations or growth prospects.

An economic downturn or any adverse change in social and political environment in Hong Kong or any
other economies may materially and adversely affect the Group’s financial condition and results of
operations.

The Group conducts most of its operations and generates most of its revenues in Hong Kong, Macau and
the PRC and therefore the financial condition and results of operations of the Group will be closely
affected by the economic development in Hong Kong, Macau and the PRC. Any significant or sudden
economic slowdown, recession or other adverse changes or developments in the local social and
economic environment in Hong Kong may adversely affect the Group’s business, financial condition,
results of operations and prospects.

Civil unrest and an uncertain political environment may impact Hong Kong’s economy. Protests causing
disruptions to commercial activities and transportation systems may adversely impact investor
confidence and affect overall business activities, which in turn may have a negative impact on the Group’s
business in Hong Kong. Any instability in the social and political landscape of Hong Kong may adversely
affect the Group’s business, financial condition and the results of its operations. Civil unrest is outside
the control of the Group and there can be no assurance that further large-scale protests will not occur in
the future which may affect the stability of the political and economic landscape in Hong Kong.

Further, with the increasing interaction between the PRC and Hong Kong economies, policies of the PRC
are also expected to have varying degrees of impact on Hong Kong and Hong Kong companies conducting
their businesses in the PRC. The Group may be affected accordingly. The Group’s performance and the
quality and growth of its assets in the PRC are dependent on the overall economic, regulatory and
political conditions of the country. The Group’s operations in the PRC may be affected by the general
state of the economy, material regulatory changes and significant political, social or legal uncertainties or
changes in the PRC (including changes in political leadership, the inflation rate, Renminbi interest rates,
and Renminbi exchange rate, etc.). There can be no assurance that the economic and political
environment in the PRC will remain favourable to the Group’s business in the PRC in future.

No assurance that the Group’s business will not be affected by sanctions or other measures imposed by
foreign governments relating to Hong Kong

On 30 June 2020, the Standing Committee of the National People’s Congress of the PRC passed the Law
of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special

14
Administrative Region (the “Hong Kong National Security Law”), criminalising secession, subversion,
terrorist activities, and collusion with a foreign country or with external elements to endanger national
security and stipulating the corresponding penalties. The Hong Kong National Security Law took effect at
11:00 p.m. on 30 June 2020 upon gazettal in Hong Kong, whereas the Implementation Rules for Article
43 of the Article 43 of the Law of the People’s Republic of China on Safeguarding National Security in
the Hong Kong Special Administrative Region (Instrument A406A), which stipulates the relevant
implementation rules for the purposes of applying Article 43 of the Hong Kong National Security Law,
took effect on 7 July 2020.

The Hong Kong Government welcomed the legislation and believes that the legislation can safeguard the
prosperity and stability of Hong Kong and provide a favourable business and investment environment.
The Hong Kong Government takes the view that the “One Country, Two Systems” principle and the
legitimate rights and freedoms enjoyed by Hong Kong residents will remain intact, and the legitimate
interests of foreign investors will continue to be protected by law.

Following the enactment of the Hong Kong National Security Law, U.S. President Donald Trump issued
an executive order on 14 July 2020 to officially sign into law the Hong Kong Autonomy Act (the
“HKAA”), which withdraws certain privileges granted to Hong Kong under the Hong Kong Policy Act of
1992, and the U.S. government indicated that it may impose sanctions or other measures relating to Hong
Kong, e.g. higher tariffs, tougher investment rules, asset freezes and more onerous visa rules. There have
been some comments that Hong Kong’s standing as an international financial centre could be at risk.
Among other things, U.S. tariffs on China and restrictions on technology transfer and investment could
become applicable to Hong Kong or Hong Kong entities or persons. Certain other foreign governments
and organisations have also taken actions in response to or expressed concern regarding the enactment of
the Hong Kong National Security Law and there is a risk that actions that have or may be taken by all or
some of them may be detrimental to Hong Kong. For example, on 3 July 2020, the Canadian government
announced that it would immediately treat exports of sensitive goods to Hong Kong in the same way as
those destined for and the PRC and it would suspend its extradition treaty with Hong Kong. On 9 July
2020, 23 July 2020 and 28 July 2020, the Australian government, the United Kingdom government and
the New Zealand government respectively announced the suspension of its extradition treaty with Hong
Kong. Until full details of the actions proposed by the U.S. and such other foreign governments and
organisations are revealed, the Group will not be able to assess the impact of such actions on Hong Kong
and the Group.

Risks Relating to the Property Businesses

Measures adopted from time to time by the Hong Kong government to restrict the real estate market
could slow the industry’s rate of growth or cause the real estate market to decline

The Hong Kong real estate market is subject to significant regulation. The Hong Kong Monetary
Authority has implemented regulatory measures in recent years to restrict the development of the real
estate market. On 27 February 2015, the Hong Kong Monetary Authority (“HKMA”) announced a series
of counter cyclical measures to banks in relation to property mortgage lending to strengthen banks’ risk
management and resilience, with immediate effect, namely (i) the maximum loan-to-value ratio (“LTV”)
for self-use residential properties with a value below HK$7 million was lowered by a maximum of 10
percentage points. For example, the maximum loan-to-value ratio applicable to properties with a value of
HK$6 million or below and subject to the LTV cap of 70 per cent. was lowered to 60 per cent.; (ii) the
maximum debt-servicing ratio (“DSR”) for borrowers who buy a second residential property for self-use
was lowered to 40 per cent. from 50 per cent., and the stressed-DSR cap was lowered to 50 per cent. from
60 per cent. and (iii) the maximum DSR of mortgage loans for all non-self-use properties, including
residential properties, commercial and industrial properties and car park spaces, was lowered to 40 per
cent. from 50 per cent., and the stressed-DSR cap was lowered to 50 per cent. from 60 per cent. On 19
May 2017, the HKMA further announced a series of new measures to banks in relation to property
mortgage lending to strengthen the risk management of banks and safeguard banking stability, with
immediate effect, which include, amongst others (i) to lower the applicable LTV cap by 10 percentage
points for property mortgage loans involving borrowers and/or guarantors with one or more pre-existing
mortgage loans, in addition to the existing requirement of lowering the applicable DSR limit by 10

15
percentage points for these loans; and (ii) to lower the applicable DSR limit by 10 percentage points for
property mortgage loans extended to borrowers whose income is mainly derived from outside of Hong
Kong, on top of the existing requirement of lowering the applicable LTV cap by 10 percentage points for
these loans. These regulatory changes (and any further measures the Hong Kong government may
introduce from time to time in the future) may have an adverse effect on the property market in Hong
Kong, and in turn, the Group’s business and profitability.

In addition, the Hong Kong Government may introduce cooling measures on the Hong Kong property
market from time to time, which may have a significant impact on the supply and demand in the property
market.

The Stamp Duty (Amendment) Ordinance 2014 (the “Amendment Ordinance”) came into effect on 28
February 2014 and was deemed to have come into operation on 27 October 2012. Under the Amendment
Ordinance, any residential property acquired on or after 27 October 2012, either by an individual or a
company (regardless of where it is incorporated), and resold within 36 months, is subject to Special
Stamp Duty (“SSD”). Residential properties acquired by any person (including a company incorporated)
except a Hong Kong permanent resident, will also be subject to a Buyer’s Stamp Duty (the “BSD”), to be
charged at a flat rate of 15 per cent. on top of the existing stamp duty and the SSD, if applicable.

The Stamp Duty (Amendment) (No. 2) Ordinance 2014 (the “Amendment Ordinance No. 2”) was
gazetted on 25 July 2014. The Amendment Ordinance No. 2 provides that the ad valorem stamp duty
(“AVD”) payable on certain instruments dealing with immovable properties executed on or after 23
February 2013 (the “Effective Date”) shall be computed at higher rates (“Scale 1 rates”). It also
advanced the timing for charging AVD on non-residential property transactions from the conveyance on
sale to the agreement for sale executed on or after the Effective Date. Under the Amendment Ordinance
No. 2, any residential property and non-residential property acquired on or after the Effective Date, either
by an individual or a company, is subject to the Scale 1 rates, except that acquired by a Hong Kong
permanent resident acting on his/her own behalf who does not own any other residential property in Hong
Kong at the time of acquisition.

The Stamp Duty (Amendment) Ordinance 2018 (the “2018 Amendment Ordinance”) was gazetted on 19
January 2018. Under the 2018 Amendment Ordinance, the AVD at Scale 1 rates enacted under the
Amendment Ordinance No. 2 are further divided into Part 1 (a flat rate of 15 per cent.) and Part 2 (original
Scale 1 rates under the Amendment Ordinance No. 2) with effect from 5 November 2016. Part 1 of the
Scale 1 rates applies to instruments of residential property and Part 2 of the Scale 1 rates applies to
instruments of non-residential property. The 2018 Amendment Ordinance provides, amongst others, that
any instrument of residential property executed on or after 5 November 2016 for the sale and purchase or
transfer of residential property, unless specifically exempted or provided otherwise, will be subject to
AVD at the rate under Part 1 of the Scale 1 rates, i.e. a flat rate of 15 per cent. of the consideration or value
of the residential property, whichever is the higher.

The Stamp Duty (Amendment) (No. 2) Ordinance 2018 (the “2018 Amendment Ordinance No. 2”) was
gazetted on 20 April 2018. The 2018 Amendment Ordinance No. 2 provides, amongst others, that
acquisition of more than one residential property under a single instrument executed on or after 12 April
2017, unless specifically exempted or provided otherwise, will be subject to AVD at the rate under Part 1
of the Scale 1 rates, i.e. a flat rate of 15 per cent. of the consideration or value of the residential property,
whichever is the higher, even if the purchaser or transferee is a Hong Kong permanent resident acting on
his/her behalf and does not own any other residential property in Hong Kong at the time of acquisition.

Besides, the Residential Properties (First-hand Sales) Ordinance (Cap. 621) has come into full operation
with effect from 29 April 2013. It aims to enhance the transparency and fairness of the sales arrangements
and transactions of first-hand residential properties to better protect the interest of purchasers. It sets out
detailed requirements in relation to sales brochures, price lists, show flats, disclosure of transaction
information, advertisements, sales arrangements, and the mandatory provisions for the preliminary
agreement for sale and purchase and agreement for sale and purchase for the sales of first-hand
residential properties.

The Hong Kong government’s restrictive measures to control property prices could limit the Group’s
access to capital resources, reduce market demand and increase the Group’s operating costs. The Hong

16
Kong government may adopt additional and more stringent measures in the future, which may further
slow the development of the industry and materially and adversely affect the Group’s business and results
of operations. In particular, any additional or more stringent measures imposed by the Hong Kong
government in the future to curb residential real estate projects may materially and adversely affect the
Group’s business and results of operations.

Measures proposed by the Hong Kong government to expedite the supply of first-hand private
residential units may have a negative impact on the Group

On 29 June 2018, the Hong Kong government proposed introducing a tax on vacant first-hand private
residential units at two times the annual rateable value of the units (the “Vacancy Tax”) to encourage
developers to release residential units more quickly into the market. Under the proposal, developers of
first-hand private residential units with an occupation permit issued for 12 or more months will be
required to make annual returns disclosing the occupancy status of their units. Units that have not been
occupied or rented out for more than six of the past 12 months will be considered vacant and subject to the
Vacancy Tax, which will be collected annually.

On 13 September 2019, the Hong Kong government gazetted an amendment bill to implement the
proposed Vacancy Tax at the Legislative Council. If implemented, the Vacancy Tax may present a
financial burden to the Group, which may have an adverse effect on its business, operating results and
financial condition. On 16 October 2019, the Hong Kong government announced plans to expand the
eligibility under the Mortgage Insurance Programme of the Hong Kong Mortgage Corporation Limited.
For a first-time home buyer, the cap on the value of property eligible for a mortgage loan with a maximum
cover of 90 per cent. loan-to-value ratio will be raised from the existing HK$4 million to HK$8 million.
The cap on the value of property eligible for a mortgage loan with a maximum cover of 80 per cent.
loan-to-value ratio will also be raised from HK$6 million to HK$10 million. As the introduction of these
measures are subject to policy changes reflecting domestic political or economic circumstances, there is
no assurance that the Hong Kong Government will not introduce further measures in the future that may
have a significant impact on the property market, which may in turn affect the Group’s operating results
and financial conditions.

Mortgage loans offered by the Group to property buyers may have a negative impact on the Group’s
financials

The Group has offered mortgage loans to its residential property buyers at loan-to-value ratios higher
than loans offered by banks and/or on terms and conditions more favourable than loans offered by banks.
These include providing interest-free periods and providing zero amortisation for a certain period of
time. Proof of income is sometimes not required for certain mortgage loan applicants. Credit risk taken
up by the Group is anticipated to be higher than that taken up by banks as the Group’s credit approval
process is significantly less stringent than that of banks, and it may be a financial burden to the Group if
the repayment ability of buyers deteriorates or if buyers default.

On 20 June 2016, the Hong Kong Monetary Authority released an article on the topic of mortgage loans
with high loan-to-value ratios offered by property developers. The article states that whilst the amount of
mortgage loans currently provided by property developers is small when compared with the total amount
of residential mortgage loans provided by banks, it has come to its attention that such loans provided by
individual developers have been increasing by multiples over the past year. Whilst property developers
are outside the supervisory ambit of the Hong Kong Monetary Authority, the fact that banks lend to
property developers which in turn provide mortgages to homebuyers indirectly increases the potential
credit risk faced by banks. On 12 May 2017, the Hong Kong Monetary Authority issued the Circular on
Risk Management for Lending to Property Developers requiring local banks to set aside an adequate
amount of capital for exposures to property developers offering high loan-to-value mortgages. To achieve
this, the risk weights for credit risk exposures to property developers will be adjusted upward if the
property developer has a mortgages-to-equity ratio of more than 5 per cent., with a larger adjustment
where such ratio is more than 10 per cent. The higher risk weights will increase the amount of capital that
banks are required to hold, which could lead to an increase in the interest rates charged to property
developers. It is uncertain whether further measures will be adopted by the Hong Kong Monetary
Authority and the impact of these measures, if any, on the financing offered by banks to property
developers.

17
The Group’s performance is dependent on the performance of the Hong Kong property market

The Group’s financial condition and results of operations are largely dependent on its investment and
rental properties and development properties situated in Hong Kong. See “Description of the Group —
Property Development and Investment — Hong Kong”. The property interests of the Group are subject to
certain risks inherent generally in the ownership of, investment in and development of real property.
These risks include the generally cyclical nature of property markets (for example, Hong Kong
residential property prices, after reaching record highs in 1997, fell significantly as a result of the Asian
economic crisis), changes in general economic, business and credit conditions, the illiquidity of land and
other real property, changes in governmental policies or regulations, building material shortages and
increases in the costs of labour and materials. The Group’s property interests are also affected by the
strength of the local economy.

In the event of economic decline, the Group may also experience market pressures that affect Hong Kong
property companies, such as pressures from existing and prospective tenants to provide rent reductions
and reduced market prices for sale properties. Rental values are also affected by factors such as political
developments, governmental regulations and changes in planning or tax laws, interest rate levels and
inflation. New residential and office properties are also scheduled for completion over the next few years
and such additional supply may adversely affect residential and office rents, occupancy rates as well as
sale prices for new residential and office units. In addition, from time to time during economic
downturns, the Group has experienced pressures from existing and prospective commercial tenants to
provide rent reductions or longer rent free periods than usually given. This has had an impact on the
Group’s rental income from its commercial property investments in the past and the recurrence of adverse
market conditions in the future may have an adverse effect on the Group’s business, operating results and
financial condition.

There is no assurance that the problems of oversupply, falling property prices and tightening of credit
provided by lenders will not recur or that the recurrence of such problems with respect to the Hong Kong
property market will not adversely affect the business, financial condition and results of operations of the
Group. Any slowdown in the economies of the United States, the European Union and certain Asian
countries may adversely affect economic growth in Hong Kong and elsewhere.

The inherent volatility of the property market impacts the best timing for both the acquisition of sites and
the sale of properties. This volatility, combined with the lead time required for completion of projects as
well as the sale of existing properties, means that the Group’s results from its property development
activities may be susceptible to significant fluctuations from year to year. Furthermore, fluctuations in
the Hong Kong property market will have an impact on the Group’s balance sheet since the Group
revalues its investment properties on a semi-annual basis.

Risks associated with the effect of global credit markets on the economy and of a global economic
slowdown

Economic developments outside Hong Kong could also adversely affect the property market in Hong
Kong and the PRC and the Group’s overall business. Since late 2008, the global credit markets have
experienced, and may continue to experience, significant dislocations and liquidity disruptions which
have originated from the liquidity disruptions in the credit and mortgage markets of the United States and
the European Union. The deterioration of the financial markets contributed to a recession in the United
States and a slowdown in the global economy, which led to significant declines in employment,
household wealth and consumer demand, and the announcement of stimulus measures by a number of
governments including quantitative easing. A number of other related events have also caused
fundamental and wide reaching disruptions to the global credit markets. Such events include the collapse
of a number of financial institutions and other entities, rising government deficits and debt levels, ratings
downgrades for the United States and certain EU sovereign debt, debt reduction measures taken by
various countries and notably in the United States and the continued deterioration of certain European
economies. On 23 June 2016, the United Kingdom voted in a national referendum to withdraw from the
European Union and on 29 March 2017, invoked Article 50 of the Treaty on European Union requiring it
to withdraw within two years. On 17 October 2019, the European Council endorsed the Withdrawal

18
Agreement Bill under Article 50. The United Kingdom legally left the European Union on 31 January
2020 and entered a transition period for 11 months from 1 February 2020 to 31 December 2020.
Uncertainty continues as the United Kingdom and the European Union have to negotiate and agree the
detail of the terms of their future trade relationship. Moreover, since July 2018, the United States and the
PRC have been involved in controversy over trade barriers that have triggered the implementation or
proposed implementation of tariffs on certain imported products into the two countries. In January 2020,
the United States and the PRC entered into ‘‘phase one’’ of an economic and trade agreement as an initial
step towards resolving the trade war disputes between them. The effect of such an agreement remains
elusive, and sustained or escalating tension between the United States and the PRC over trade policies
could significantly undermine the stability of the global economies.

These events have had and continue to have a significant adverse impact on the global credit and financial
markets which may adversely affect economic growth in countries where the Group has investment
properties. There can be no assurance that the slowdown in the global economy will not result in
oversupply and reduced property prices and rentals in countries where the Group has investment
properties. Hong Kong and other stock market prices have also experienced significant volatilities which
may continue to affect the value of the Group’s investments.

The Group’s property investment and development businesses may require significant capital
resources to fund land acquisitions and property developments

Property development is capital intensive. The Group’s ability to secure sufficient financing for land
acquisition and property development depends on a number of factors that are beyond their control,
including market conditions in debt capital markets, investors’ perception of their debt securities,
lenders’ perception of their creditworthiness, the Hong Kong economy, the global economy and
regulations that affect the availability and finance costs for real estate companies. Any deterioration in
these factors, such as that which has occurred in the global credit and financial markets in recent years (as
discussed above), may make it difficult for the Group to access financial markets and make it more
difficult or expensive to obtain funding in the future. This may have a material adverse effect on the
Group’s cash flow position, financial condition and business plans. The Group may also be subject to
solvency risks of its banks and of its counterparties in its financial investments and arrangements.

The illiquidity of property investments and the lack of alternative uses for properties could limit the
Group’s ability to respond to adverse changes in the performance of its properties

As properties are in general relatively illiquid, the Group’s ability to sell them promptly in response to
changing economic, financial and investment conditions is limited. The real estate market is affected by
many factors beyond the Group’s control, such as general economic conditions, availability of financing,
interest rates, supply and demand of properties and other factors that are beyond the Group’s control. The
Group cannot predict whether it will be able to sell any of its properties for the price or on the terms set
by it, or whether any price or other terms offered by a prospective purchaser would be acceptable to it.
The Group also cannot predict the length of time needed to find a purchaser and to close a sale in respect
of a property.

Should a decision be made to sell a property subject to a management agreement or tenancy agreement,
the Group may have to obtain consent from, or pay termination fees to, its management partners or its
tenants.

In addition, properties are not readily convertible to alternative uses if they become unprofitable due to
competition, age, decreased demand or other factors. The conversion of properties to alternative uses
would generally require substantial capital expenditures. In particular, the Group may be required to
expend funds to maintain properties, correct defects, or make improvements before an investment
property can be sold. There is no assurance that the Group will have funds available for these purposes.
These factors and any other factors that would impede the Group’s ability to respond to adverse changes
in the performance of its investment properties could affect its ability to retain tenants and to compete
with other market participants, as well as affecting its results of operations.

19
A part of the Group’s property business is conducted through joint ventures and associates in Hong
Kong and the PRC

The Group has investments in several joint venture companies and associates in connection with its
property investments and developments, principally in Hong Kong and the PRC. Such joint ventures may
involve special risks associated with the possibility that the Group’s joint venture partners may:

• have economic or business interests or goals that are inconsistent with those of the Group;

• take action contrary to the instructions or requests of the Group or contrary to the Group’s policies
or objectives with respect to its property investments;

• be unable or unwilling to fulfil their obligations under the joint ventures or other agreements; or

• experience financial or other difficulties.

Joint venture partners are not restricted from competing with the Group on other projects. In the PRC,
property investment and development may often involve the participation of local and foreign partners,
and there may be additional risks or problems associated with joint ventures and associates in the PRC.
For instance, guarantees given by PRC parties in relation to joint ventures in the PRC may be difficult to
enforce as their validity may depend on the financial and legal qualifications of the guarantors and the
appropriate approvals having been obtained. Although the Group does not believe that it has experienced
any significant problems with respect to its partners to date, should such problems occur in the future they
could have a material adverse effect on the businesses and prospects of the Group.

The Group is subject to general risks of doing business overseas and may not be able to manage its
expansion and growth successfully

The Group has commercial interests in the PRC and Macau, including interests in residential and
commercial property development and property investments, and plans to increase these in the future as
part of its growth strategy. The Group also has property investments in other overseas markets, including
but not limited to Singapore, Japan, Malaysia, the United Kingdom and the United States. The Group’s
expansion in the PRC and investment in other overseas markets will be based on its forward-looking
assessment of market prospects. There is no assurance that the Group’s assessments will turn out to be
accurate. In addition, to succeed in its business expansion, the Group will need to recruit and train new
managers and other employees and build its operations and reputation in its target regional markets
within a relatively short period of time. The Group may have limited knowledge of the conditions of these
local property markets and little or no experience in property development in these regions. As it enters
new markets, the Group may not have the same level of familiarity with contractors, business practices,
customs, customer tastes, behaviour and preferences as compared to the cities where it is an established
property developer. In addition, when the Group enters new geographical areas, it may face intense
competition from developers with an established presence and market share in those areas. Accordingly,
the Group is subject to greater exposure and the risks associated with conducting business in the PRC and
other overseas markets. The need to integrate operations arising from the Group’s expansion, particularly
into other fast growing second-tier cities in the PRC may place a significant strain on the Group’s
managerial, operational and financial resources and contribute to an increase in the Group’s financing
requirements. Restrictive measures enacted by the PRC government, new policy measures and the terms
of and procedures relating to land clearance agreements may also have a material impact on the Group as
it further expands into the PRC. See “Risks Relating to the PRC and Hong Kong — The Group’s business
in the PRC is subject to extensive governmental approval and compliance requirements”. The respective
governments of the countries in which the Group has property investments may introduce new policies
and/or regulations, or amend or abolish existing policies and/or regulations at any time, which could
affect the value of the Group’s investments and its profitability. Furthermore, repatriation of investment
income, capital and the proceeds from sales of property by foreign investors such as the Group may
require certain governmental registration and approval. If the governments of the jurisdictions in which
the Group has investments tighten or otherwise change their laws and regulations relating to the
repatriation of their local currency, the Group’s ability to repatriate profits may be affected and

20
accordingly, the Group’s cash flow may be adversely affected. The Group may also be subject to a variety
of risks incidental to the ownership of and investments in land and real estate in these countries, including
changes in the supply of, or demand for, investment property in an area, changes in interest rates and the
availability of financing, difficulties in mortgaging due to uncertainty in land and security regulations,
difficulties which may be encountered at land or security registries, changes in property tax rates and/or
land use and lease laws, problems caused by zoning or urban planning, credit risks of tenants, suppliers,
contractors and borrowers, and environmental factors. The feasibility, marketability and value of any
project in these countries may therefore be affected by factors beyond the Group’s control.

The Group may not always be able to obtain sites that are suitable for development or investment

The Group derives a substantial part of its revenue from sales and leases of properties that it has
developed. This revenue stream depends on the completion of, and the Group’s ability to sell or lease, its
property developments. The success of properties developed by the Group and retained for leasing
purposes, and other properties acquired for investment, is dependent upon their ability to compete on the
basis of accessibility, location and quality of tenants. In order to maintain and grow its business in the
future, the Group will be required to replenish its land reserve with suitable sites for development. The
Group’s ability to identify and acquire suitable sites for development or investment is subject to a number
of factors that are beyond its control. The Group’s business, financial condition and results of operations
may be adversely affected if it is unable to obtain sites for development or investment at prices that allow
it to achieve reasonable returns upon sale or lease to its customers.

The amount of land offered by the Hong Kong government by auction is limited. This affects the Group’s
ability to replenish its Hong Kong land bank. In addition, the PRC government controls all new land
supply in the PRC and regulates land sales in the secondary market. The PRC central and local
governments may regulate the means by which property developers, including the Group, obtain land
sites for property developments. See “Risks Relating to the PRC and Hong Kong — PRC political, legal
and economic risks”. There is no assurance that the Group will be successful in tendering or bidding for
sites. In addition, the Group has acquired and in the future intends to acquire land by acquiring other
property development companies and there is no assurance that the Group will be able to obtain
applicable government approvals for companies so acquired. As a result, the policies of the Hong Kong
government and the PRC government towards land supply may adversely affect the Group’s ability to
acquire land use rights for sites it seeks to develop and could increase the costs of any acquisition.

The Group’s revenue and results of operations from property development and property investment
fluctuate significantly from period to period

The Group’s results of operations from property development have varied significantly in the past and
may continue to fluctuate significantly from period to period in the future. The Group’s revenue and
results of operations from property development for each period depend primarily on the number of
properties that become available for sale or pre-sale in such periods. The Group’s revenue from sales of
completed properties is recognised when the construction of the relevant properties have been completed,
properties have been delivered to the purchaser pursuant to the sale and purchase agreements and
collectability of related receivables is reasonably assured.

The Group cannot predict with certainty the time of the completion and delivery of a property, and hence
the time of the revenue recognition from any pre-sale and the ability to use all the proceeds from such
pre-sale, as the completion of any property development will vary according to its construction timetable
and the time required to obtain the certificate of completion. Accordingly, due to the volatile nature of the
revenue that is generated from property development, the periods discussed in the financial statements
included in this Offering Circular may not be comparable to each other or other future periods.

The Group’s results of operations from property investment and development included an increase in the
fair value of the investment properties, which was unrealised. Upward revaluation adjustments reflect
unrealised capital gains on the Group’s investment properties at the relevant balance sheet dates and are
not profit generated from the sales or rentals of the Group’s investment properties. They do not generate
any actual cash inflow to the Group for potential dividend distribution unless and until such investment
properties are disposed of at similarly revalued amounts.

21
The amount of revaluation adjustments has been, and may continue to be significantly affected by the
prevailing conditions in the property markets and may be subject to market fluctuations. Macroeconomic
factors, including economic growth rate, interest rate, inflation rate, urbanisation rate and disposable
income level can substantially affect the fair value of the Group’s investment properties and affect the
supply and demand in those property markets. All these factors are beyond the Group’s control. There can
be no assurance that the Group will continue to record similar levels of increase in the fair value of
investment properties in the future. Moreover, the fair value of the Group’s investment properties could
decrease in the event that the market for comparable properties experiences a downturn as a result of the
government policies aimed at “cooling-off” the property market, or otherwise. Any such decrease in the
fair value of the Group’s investment properties may materially and adversely affect results of operations
from property investment and development.

The Group may experience schedule delays or budget overruns in completing the Group’s property
development projects and may be adversely affected by the concentration of such projects

Property development projects typically require substantial capital outlay during the construction period
and may take months or years before positive cash flows can be generated by pre-sales or sales of
completed property developments, if at all. The time and costs required in completing a property
development project may be subject to substantial increases due to many factors, including shortages of
materials, equipment, technical skills and labour, adverse weather conditions, natural disasters, labour
disputes, disputes with contractors, accidents, changes in government priorities and policies, changes in
market conditions, delays in obtaining the requisite licences, permits and approvals from the relevant
authorities and other unforeseeable problems and circumstances. Any of these factors may lead to delays
in, or prevention of, the completion of a property development project and result in costs substantially
exceeding those originally budgeted for. Furthermore, any failure to complete a property development
project according to its original specifications or schedule may give rise to potential liabilities and, as a
result, the Group’s return on investments may be lower than originally expected. The Group’s property
development portfolio may be concentrated on a few projects which may form a significant proportion of
the Group’s portfolio. This may entail a higher level of risk than a portfolio which has a larger number of
projects spread over a large geographical area. Any such increase in time and costs or failure to complete
such projects could materially and adversely affect the Group’s business, financial condition and results
of operations.

In addition, any decreases in property prices or adverse developments in the property market after the
acquisition of a parcel of land and prior to the pre-sales or sales of completed property developments on
such land could also have an adverse impact on the Group’s business, financial condition and results of
operations.

The Group may not be able to obtain land use right certificates in its projects with respect to certain
parcels of land in which it has acquired an interest

Land use right certificates are granted once the land premium is paid, and land use right certificates may
not be issued piecemeal in proportion to the payment of the land premium in Hong Kong and the PRC. If
the Group fails to obtain the relevant land use right certificates for any acquired land, it will not be able
to develop and sell properties on such land. The Group may not be able to acquire replacement land
parcels on terms acceptable to it, or at all. All or any of these factors may have an adverse effect on the
Group’s business.

The Group may be unable to renew tenancies or re-lease space at rental rates equal to or above the
current rental rates or at all for investment and rental properties when tenancies expire and may not
receive rent payments in a timely manner

A portion of the Group’s turnover from property investment and development is derived from income
from renting office space and from renting retail and residential properties held as investment and rental
properties. Most residential investment and rental properties are leased on a relatively short term basis
(primarily two years with a break clause allowing tenants the right of early termination by serving two or
three months’ notice after the first 12 months). Financial performance may be materially and adversely

22
affected in the event of a decline in rental or occupancy levels, or difficulties in securing lease renewals
or obtaining new tenants, or if existing tenants reduce the amount of space that they occupy, or fail to
comply with the terms of their lease or commitment to lease, or seek the protection of bankruptcy laws
delaying or preventing receipt of rent payments, for any reason. E-commerce in particular may impact the
Group’s ability to renew tenancies, obtain new tenants or re-lease space at satisfactory rental rates as
more tenants move online and require less space or no space at all to run their business. The Group cannot
be assured that existing tenants will renew their leases upon expiration or that the Group will be able to
find replacement tenants at rental rates equal to or higher than those of the expiring tenancies. Moreover,
the Group may be unable to obtain replacement tenants in a timely manner so as to minimise vacancy
periods in between tenancies or to obtain rental rates equal to or above the current rental rates for
tenancies. Furthermore, if vacant space cannot be leased out for a significant period of time, the market
value of the Group’s investment and rental properties may be adversely affected. In the case of residential
properties, the short term leases involved also give rise to increased volatility. Any such situation may
materially and adversely affect the Group’s cashflow, business, financial condition and results of
operations from property investment and development.

Potential liability for environmental problems could result in costs to the Group

The Group is subject to various laws and regulations concerning the protection of health and the
environment. The particular environmental laws and regulations which apply to any given project
development site vary greatly according to the site’s location, its environmental condition, the present
and former uses of the site, as well as the presence of any adjoining properties. Environmental laws and
conditions may result in delays to the Group’s property developments, may cause the Group to incur
compliance and other costs and can prohibit or severely restrict project development activity in
environmentally-sensitive regions or areas.

Each project the Group develops is required under applicable local laws and regulations to undergo
environmental assessments. Further, an environmental impact assessment document is required to be
submitted to the relevant government authorities for approval before commencement of construction.

The local authorities may request the Group to submit additional environmental impact documents, issue
orders to suspend the construction and/or impose penalties for any projects that have not, prior to the
commencement of construction, received approval following the submission of the environmental impact
assessment documents. Although the environmental investigations conducted to date have not revealed
any environmental liability that the Group believes would have a material adverse effect on its business,
financial condition or results of operations, it is possible that these investigations did not reveal all
environmental liabilities, or that there are material environmental liabilities of which the Group is
unaware.

The Group is subject to uninsured risks

The Group maintains insurance coverage on its properties under construction, third party liabilities and
employer’s liabilities, as well as other insurance typical for the industries in which it operates and in
amounts that it believes to be adequate. However, certain types of losses such as war, civil disorder, acts
of terrorism, earthquakes, typhoons, flooding, and other natural disasters are not covered as they are
either uninsurable or not economically insurable. Accordingly, there may be circumstances in which the
Group will not be covered or compensated for certain losses, damages and liabilities, which may in turn
adversely affect its financial position and results of operations.

Risks Relating to the Financial Investment Portfolio and Loan Activities

The Group’s investments and loans are subject to economic, political, market, counterparty and
company specific changes

The prices of the Group’s investments, including but not limited to debt, private equity and public equity,
are subject to economic, political, market, counterparty and company specific changes. Such changes
may adversely affect prices of securities regardless of company specific performance. Additionally,

23
different industries, financial markets and securities can react differently to these changes. Such
fluctuations in the value of the Group’s portfolio are often exacerbated in the short-term as well. The risk
that one or more companies in the Group’s portfolio will fall, or fail to rise, may adversely affect the
overall portfolio performance in any given period.

In particular, tensions between the United States and the PRC over trade policies has and may continue to
cause volatility in the equity and fixed income markets. This may lead to lower returns on the Group’s
equity investments and an increased risk of default on the Group’s fixed income investments, which may
adversely affect the overall performance of the Group’s portfolio.

Further, the Group’s investments in securities which are issued out of different countries and
denominated in different currencies involve certain risks. These risks are typically increased in
developing countries and emerging markets. Such risks, which can have adverse effects on portfolio
holdings, may include: (i) investment and repatriation restrictions; (ii) currency fluctuations; (iii) the
potential for unusual market volatility as compared to more industrialised countries; (iv) government
involvement in the private sector; (v) limited investor information and less stringent investor disclosure
requirements; (vi) shallow and substantially smaller liquid securities markets than in more developed
countries, which means the Group may at times be unable to sell certain securities at desirable prices;
(vii) certain local tax law considerations; (viii) limited regulation of the securities markets; (ix)
international and regional political and economic developments; (x) possible imposition of exchange
controls or other local governmental laws or restrictions; (xi) adverse effects from deflation and inflation;
(xii) limited legal recourse for the Group; and (xiii) the under-development of custodial and/or the
settlement systems.

The Group may invest in initial public offerings from time to time. The market values of shares in initial
public offerings may experience high volatility due to factors such as the absence of a prior public
market, unseasoned trading, the limited number of shares available for trading and limited information
about the issuer. The Group may be subject to lock-up arrangements in relation to certain investments.
Such arrangements may limit or restrict the Group’s ability to exit investments. Additionally, the Group
may hold shares acquired from initial public offerings for a very short period of time, which may increase
the Group’s expenses. Some investments in initial public offerings may have an immediate and
significant impact on the Group’s performance. The Group has the flexibility under its investment
strategy to hold large amounts of cash if investment opportunities are not available or market conditions
are not suitable. While this strategy can assist the Group during times of falling markets, holdings in cash
may result in lower returns when compared to equity investments.

The Group engages in loan participation financing and is subject to those risks inherent in such activities,
including economic, political, and counterparty risks. Any adverse changes in these areas may result in
decreased cashflow of the Group’s debtors and lead to a deterioration in the quality of the Group’s loans.

The Group is exposed to fair value fluctuations on its derivative financial instruments and investments

The Group manages its interest rate and foreign currency risk with derivative financial instruments such
as interest rate swaps and foreign exchange contracts. Such derivative financial instruments are initially
recognised at fair value and are subsequently re-measured at fair value. The gain or loss on
re-measurement to fair value is recognised immediately in the profit and loss account. The fair value of
forward exchange contracts is calculated with reference to current forward exchange rates and by
discounting the future cash flows. The fair value of interest rate swaps contracts is determined as the
present value of the estimated future cash flows based on observable yield curves.

The Group has entered into interest rate swaps (“IRS”) and cross currency swaps (“CCS”) to manage the
interest rate and foreign currency risks. The Group has utilised CCS when converting U.S. dollar
liabilities into Hong Kong dollar liabilities and IRS when converting floating rate liabilities into fixed
rate liabilities in order to control interest expenses, in particular when an interest rate hike is anticipated.
The Guarantor does not over hedge its position once fixed but it may become over hedged to the extent
underlying liabilities are prepaid. Moreover, the Group may have a portfolio hedge in place instead of a
specific hedge which it will over hedge or under hedge depending on the loan(s) outstanding. CCS and

24
IRS may not satisfy the criteria of hedge accounting and that mark-to-market gain or loss will be reflected
in the consolidated income statement, instead of other comprehensive income. In addition, interest rate
changes may be against the forecast of management.

The Group holds investments classified as financial assets at fair value through profit or loss. For
securities traded actively on organised financial markets, fair value is generally determined by reference
to stock exchange quoted market bid prices at the close of business on the balance sheet date. For
investments in unlisted funds that are stated at fair value and are not quoted in an active market, fair value
is determined primarily by reference to other prices observed in recent transactions or valuation
techniques when the market price is not readily available. The fair value of other financial instruments
that are stated at fair value and are not traded in an active market is estimated using other prices observed
in recent transactions or valuation techniques when the market price is not readily available. For the year
ended 31 March 2020, the Group recognised a net gain on financial assets at fair value through profit or
loss and derivatives of approximately HK$52 million (net loss of HK$113 million for the year ended 31
March 2019) (see “the Guarantor’s audited consolidated income statement for the year ended 31 March
2020” set out herein).

The Group is therefore exposed to market price fluctuations in respect of derivative financial instruments
and investments, which may result in volatility in its financial results. Further, there can be no assurance
of the appropriateness of the method of valuation adopted by the Group in relation to investments that are
not traded in an active market.

The Group holds loans and investments for which no active market exists

The Group holds certain loans and investments, including in funds, debt and private equity, which are not
traded on any organised financial market and which are not otherwise actively traded. The Group’s
intention is generally to hold such loans and investments to maturity or for the long term. However, as
such loans and investments are in general relatively illiquid, the Group’s ability to sell them promptly in
response to changing economic, financial and investment conditions is limited and the Group cannot
predict whether it would be able to sell any such loan or investment for a price that is at or above its cost
to the Group, or is reflective of its value as determined by the Group. If the Group is unable to dispose of
such loans or investments promptly or at a price consistent with their valuation, the Group’s financial
results and position could be adversely affected.

Risks Relating to the Life Sciences Investments

Biotech companies are subject to risks relating to regulatory approvals and compliance and
intellectual property and proprietary technology

Nan Fung Life Sciences (“NFLS”), a subsidiary of the Guarantor, invests in funds that invest in biotech
portfolio companies. Such portfolio companies may need to obtain various regulatory approvals and
comply with extensive regulations regarding safety, quality and efficacy standards in order to market its
products. These regulations, including the time required for regulatory review, vary across jurisdictions
and can be lengthy, expensive and uncertain. There is no guarantee that any products of any portfolio
company will be able to obtain the necessary regulatory approvals to promote that product in any of its
targeted markets and any such regulatory approval may include significant restrictions on the uses for
which the relevant products can be promoted and used. In addition, portfolio companies may incur
significant costs in obtaining or maintaining its regulatory approvals. Delays or failure in obtaining
regulatory approval for products may to have a material adverse effect on the value of the relevant
portfolio company and have a consequential impact on the return on investment available to the funds in
which NFLS invests, and thus the performance of NFLS’s overall portfolio.

In addition, no assurance can be given that any current or future patent applications by any portfolio
company will result in granted patents, that the scope of any patent protection will exclude competitors or
provide competitive advantages to the relevant portfolio company, that any portfolio company’s patents
will be held valid if challenged or that third parties will not claim rights in or ownership of the patents and
other proprietary rights held by any portfolio company. When patents, trademarks or other proprietary

25
rights are obtained, the portfolio company may be subject to claims in relation to the infringement of
these rights. Adverse judgments against any portfolio company may give rise to significant liabilities in
damages, legal fees and/or an inability to manufacture, market or sell products either at all or in particular
territories using existing trademarks and/or particular technology. Where a portfolio company has given
assurances to customers that its products do not infringe proprietary rights of third parties, any such
infringement might also expose such portfolio company to liabilities to those customers. Even claims
without merit could deter customers and have a detrimental effect on a portfolio company’s business as
well as being costly and time consuming to defend and could divert such portfolio company’s resources.
Further, there can be no assurance that other companies or individuals have not developed or will not
develop similar products, duplicate any of any portfolio company’s products or design around any patents
held by any portfolio company. Others may hold or receive patents which contain claims having a scope
that covers products developed by a portfolio company (whether or not patents are issued to such
portfolio company). A portfolio company may rely on patents to protect, among other things, its products.
These rights act only to prevent a competitor from copying but not from independently developing
products that perform the same functions. No assurance can be given that others will not independently
develop or otherwise acquire substantial equivalent techniques or otherwise gain access to a portfolio
company’s unpatented proprietary technology or disclose such technology or that any portfolio company
can ultimately protect meaningful rights to such unpatented proprietary technology.

The bioVenture Funds primarily invest in early stage companies, which may subject the bioVenture
Funds and NFLS to a greater risk of loss

NFLS invests through two dedicated venture capital funds, namely Pivotal bioVenture Partners Fund I,
L.P. and Pivotal bioVenture Partners China USD Fund I, L.P. (the “bioVenture Funds”). The bioVenture
Funds primarily invest in early stage companies. Investments in such early stage portfolio companies may
involve greater risks than are generally associated with investments in more established companies. For
example, to the extent there is any public market for securities in such companies, such securities may be
subject to more abrupt and erratic market price movements than those of larger, more established
companies. Such companies may have shorter operating histories on which to judge future performance
and, if operating, may have negative cash flow. In the case of start-up enterprises, such companies may
not have significant or any operating revenues. Such companies may also have a lower capitalisation and
fewer resources (including cash) and be more vulnerable to failure, resulting in the loss of the relevant
bioVenture Fund’s entire investment. The availability of capital is generally a function of capital market
conditions that are beyond the bioVenture Funds’ control, the control of the underlying private equity
sponsors, or portfolio companies in which the bioVenture Funds invest. There can be no assurance that
any portfolio company will be able to predict accurately the future capital requirements necessary for
success or that additional funds will be available from any source. In addition, early stage portfolio
companies are more likely to depend on the management talents and efforts of a small group of persons
and, as a result, the death, disability, resignation or termination of one or more of those persons could
have a material adverse impact on their business and prospects and the investment made.

Risks Relating to the PRC and Hong Kong

The occurrence of a contagious disease in Asia could affect the Group’s business, financial condition
or results of operations

The outbreak of an infectious disease such as the Influenza A (H1N1-2009), human avian influenza,
Severe Acute Respiratory Syndrome, Ebola, Middle East Respiratory Syndrome, the novel coronavirus
COVID-19 and other events beyond the control of the Group, in Asia and elsewhere, together with any
resulting restrictions on travel and/or imposition of quarantines, could have a negative impact on the
economy and business activities in Asia and elsewhere and could thereby adversely impact the Group’s
business, financial condition and results of operations. There can be no assurance that any precautionary
measures taken against infectious diseases would be effective. Concerns about the spread of COVID-19
and H7N9 strain of flu (Avian Flu) in China and outbreaks of the H1N1 virus (Swine Flu) in North
America, Europe and Asia in the past have caused governments to take measures to prevent spread of the
virus. The outbreak of communicable diseases such as the ones listed above on a global scale may affect
investment sentiment and result in sporadic volatility in global capital markets or adversely affect PRC

26
and other economies. For example, in particular, the recent outbreak of COVID-19 in the PRC and Hong
Kong has resulted in restrictions on travel and public transport and prolonged closures of workplaces,
which have in turn had an impact on the Group’s operations, including on the progress of construction of
property development projects and delays in receiving government approvals relating to projects in
development. Continuation or escalation of the COVID-19 outbreak may have a material adverse effect
on the global economy and on the Group’s operations and business. The Group has taken certain measures
to assist its tenants, including providing rental concessions to some of its tenants in Hong Kong and
China, which could lead to a potential decrease in its rental income and valuation of investment
properties. The Group has also experienced delays in constructions of certain of its projects due to,
among others, delays in shipments of supplies, delays in submission of relevant documents to and
application processing by governmental authorities, and reduction in some of its staffs as a result of
health concerns and government-mandated quarantine protocols, all of which could lead to potential
delays with launch of new projects and other interruptions to the Group’s business. In addition, for
example, past occurrences of epidemics such as SARS have caused different degrees of damage to the
national and local economies in Hong Kong and China.

There can be no assurance that there will not be a significant outbreak of a highly contagious disease in
Hong Kong or the PRC in the future, that existing outbreaks will not persist or escalate or that
precautionary measures taken in response to such contagious diseases would not seriously disrupt the
operations and business of the Group, or have a material adverse impact on the business, financial
condition or results of operations of the Group.

The Group’s business in the PRC is subject to extensive governmental approval and compliance
requirements

The Group’s business operations in the PRC are subject to extensive governmental regulation. As with
other property developers in the PRC, the Group’s property investment and development business must
comply with various requirements mandated by PRC laws and regulations, including policies and
procedures established by local authorities designed to implement national laws and regulations. In order
to develop and complete a property development, the Group’s property investment and development
business must obtain various permits, licences, certificates and other approvals from the relevant
administrative authorities at various stages of property development and leasing, as well as for hotel
operations, including, for example, land use right documents, planning permits, construction permits,
pre-sale permits and certificates or confirmation of completion and acceptance. Each approval is
dependent on the satisfaction of certain conditions.

There can be no assurance that the Group will not encounter major problems in fulfilling the conditions
precedent to the receipt of approvals or that the Group will be able to adapt itself to new laws, regulations
or policies that may come into effect from time to time with respect to the real estate industry in general
or particular processes with respect to the issuance of such approvals.

PRC political, legal and economic risks

A portion of the Group’s operations are located in the PRC. The Guarantor expects that the Group will
make further investments in the PRC, and that the Group’s assets in the PRC will account for an
increasing share of its overall income base. The Guarantor’s financial condition, results of operations and
future prospects depend to a large extent on the success of the Group’s operations in the PRC and are
subject, to a significant degree, to the political and economic situation and legal developments in the
PRC.

The PRC economy differs from the economies of most developed countries in many respects, including,
but not limited to:

• extent of government involvement;

• level of development;

• growth rate;

27
• economic and political structure;

• control of foreign exchange;

• allocation of resources; and

• regulation of capital reinvestment.

While the PRC economy has experienced significant growth in past decades, growth has been uneven,
both geographically and among the various sectors of the economy. The PRC government has
implemented various measures to encourage economic growth and to guide the allocation of resources.

Some of these measures benefit the overall PRC economy but may also have a negative effect on the
Group’s operations. For example, the Group’s business and financial condition may be adversely affected
by the PRC government’s control over capital investments or any changes in tax regulations or foreign
exchange controls that are applicable to it.

The PRC economy has been transitioning from a planned economy to a more market-oriented economy.
Although in recent years the PRC government has implemented measures emphasising the utilisation of
market forces for economic reform, the reduction of state ownership of productive assets and the
establishment of sound corporate governance in business enterprises, a substantial portion of productive
assets in the PRC is still owned by the PRC government. In addition, the PRC government continues to
play a significant role in regulating the development of industries in the PRC by imposing topdown
policies. It also exercises significant control over PRC economic growth through the allocation of
resources, controlling the payment of foreign currency-denominated obligations, setting monetary policy
and providing preferential treatment to particular industries or companies. There is no assurance that
future changes in the PRC’s political, economic and social conditions, laws, regulations and policies will
not have a material adverse effect on the Group’s current or future business and financial condition.

The legal system in the PRC is less developed than in certain other countries and laws in the PRC may
not be interpreted and enforced in a consistent manner

The PRC legal system is a civil law system. Unlike the common law system, the civil law system is based
on written statutes in which decided legal cases have little value as precedents. Since 1979, the PRC
government has begun to promulgate a comprehensive system of laws and has introduced many new laws
and regulations to provide general guidance on economic and business practices in the PRC and to
regulate foreign investment. Progress has been made in the promulgation of laws and regulations dealing
with economic matters such as corporate organisation and governance, foreign investment, commerce,
taxation and trade. The promulgation of new changes to existing laws and the abrogation of local
regulations by national laws could have a negative impact on the business and prospects of the Group. In
addition, as these laws, regulations and legal requirements are relatively recent, their interpretation and
enforcement may involve significant uncertainty. The interpretation of PRC laws may be subject to policy
changes, which reflect domestic political changes. As the PRC legal system develops, the promulgation
of new laws, changes to existing laws and the pre-emption of local regulations by national laws may have
an adverse effect on the Group’s business and financial condition.

Currency risks

The Group’s revenue, costs, debts and capital expenditure are mainly denominated in Hong Kong dollars,
Renminbi, U.S. dollars and sterling. Consequently, portions of the Group’s costs, profit margins and asset
values are affected by fluctuations in the exchange rates among the above-mentioned currencies.

Due to its expansion in the PRC, a material portion of the Group’s revenue is denominated in Renminbi
and must be converted to make payments in freely convertible currencies. Under the PRC’s foreign
exchange regulations, payments of current account items, including profit distributions, interest
payments and expenditures from trade, may be made in foreign currencies without prior approval, subject

28
to certain procedural requirements. However, strict foreign exchange controls continue for capital
account transactions, including repayment of loan principal and return of direct capital investments and
investments in negotiable securities. In the past, there have been shortages of U.S. dollars or other foreign
currencies available for conversion of Renminbi in the PRC, and it is possible such shortages could recur,
or that restrictions on conversion could be re-imposed.

The value of the Renminbi against the U.S. dollar and other currencies fluctuates and is affected by,
among other things, changes in China’s political and economic conditions. Since the introduction of a
regulated floating exchange rate system in 2005, the PRC government has made, and may in the future
make, further adjustments to the exchange rate system. The People’s Bank of China (“PBOC”) surprised
markets in August 2015 by thrice devaluing the Renminbi, lowering its daily mid-point trading price
significantly against the U.S. dollar. Renminbi depreciated significantly against the U.S. dollar following
this August 2015 announcement by the PBOC. In January and February 2016, Renminbi experienced
further fluctuation in value against the U.S. dollar. With an increased floating range of the Renminbi’s
value against foreign currencies and a more market-oriented mechanism for determining the mid-point
exchange rates, the Renminbi may further appreciate or depreciate significantly in value against the U.S.
dollar or other foreign currencies in the long-term. Any significant appreciation of the Renminbi against
the U.S. dollar or other foreign currencies may result in the decrease in the value of the Group’s foreign
currency-denominated assets. Conversely, any significant depreciation of the Renminbi may adversely
affect the value of its investments in the PRC. In addition, there are limited instruments available for the
Group to reduce its foreign currency risk exposure at reasonable costs. All of these factors may have a
material adverse impact on the business, financial condition or results of operations of the Group.

Risks associated with the effect of civil unrest on the Hong Kong economy

Civil unrest and an uncertain political environment may impact the Hong Kong economy and result in an
economic slowdown. Protests, demonstrations or rioting causing mass disruption to businesses and
transportation such as the anti-extradition bill protests in 2019, or the Occupy Central Movement that
took place during the latter half of 2014, may decrease consumer spending and inbound tourism to Hong
Kong, which in turn may have a negative impact on the local economy. If consumers avoid areas affected
by social upheaval or are unable to reach these areas due to disruption in transportation or outbreak of
violence, local businesses may be affected, especially if tensions become protracted and remain
unresolved. Political uncertainty and a lack of decisive action to deal with social tensions, as
demonstrated by the anti-extradition protests, may also adversely affect the economy. Moreover, inbound
tourism may decrease, with less tourists travelling to Hong Kong in order to avoid any conflict. Civil
unrest is outside the control of the Group and any such demonstrations, protests or riots could adversely
impact the Hong Kong economy and result in an economic slowdown. Such a development may adversely
affect the business of the Group’s tenants and their ability to make rental payments. For example, in
October 2019 to January 2020, the Group had granted rental concessions of up to 25% of monthly rent for
certain tenants which were materially and adversely affected by the anti-extradition bill protests in 2019.

Risks relating to the Notes issued under the Programme

The Notes may not be a suitable investment for all investors

Each potential investor in any Notes must determine the suitability of that investment in light of its own
circumstances. In particular, each potential investor should:

(i) have sufficient knowledge and experience to make a meaningful evaluation of the relevant Notes,
the merits and risks of investing in the relevant Notes and the information contained or incorporated
by reference in this Offering Circular, any applicable supplement to the Offering Circular or any
Pricing Supplement;

(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its
particular financial situation, an investment in the relevant Notes and the impact such investment
will have on its overall investment portfolio;

(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the
relevant Notes, including where principal or interest is payable in one or more currencies, or where
the currency for principal or interest payments is different from the potential investor’s currency;

29
(iv) understand thoroughly the terms of the relevant Notes and be familiar with the behaviour of any
relevant indices and financial markets; and

(v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for
economic, interest rate and other factors that may affect its investment and its ability to bear the
applicable risks.

Some Notes may be complex financial instruments and such instruments may be purchased as a way to
reduce risk or enhance yield with an understood, measured, appropriate addition of risk to the purchaser’s
overall portfolios. A potential investor should not invest in Notes which are complex financial
instruments unless it has the expertise (either alone or with the help of a financial adviser) to evaluate
how the Notes will perform under changing conditions, the resulting effects on the value of such Notes
and the impact this investment will have on the potential investor’s overall investment portfolio.

Additionally, the investment activities of certain investors are subject to legal investment laws and
regulations, or review or regulation by certain authorities. Each potential investor should consult its legal
advisers to determine whether and to what extent (1) the Notes are legal investments for it, (2) the Notes
can be used as collateral for various types of borrowing, and (3) other restrictions apply to its purchase of
any Notes. Financial institutions should consult their legal advisers or the appropriate regulators to
determine the appropriate treatment of the Notes under any applicable risk-based capital or similar rules.

Modification and waivers

The Conditions contain provisions for calling meetings of Noteholders to consider and vote upon matters
affecting their interests generally or to pass resolutions in writing. These provisions permit defined
majorities to bind all Noteholders including Noteholders who did not attend and vote at the relevant
meeting, or as the case may be, did not sign the written resolution, including those Noteholders who voted
in a manner contrary to the majority.

The Conditions also provide that the Trustee may, without the consent of Noteholders, Receiptholders or
Couponholders agree, to (i) any modification of, or to the waiver or authorisation of any breach or
proposed breach of, any of the Conditions or any of the provisions of the Trust Deed, or determine,
without any such consent as aforesaid, that any Event of Default or Potential Event of Default (as defined
in the Trust Deed) shall not be treated as such (provided that, in any such case, it is not, in the opinion of
the Trustee, materially prejudicial to interests of the Noteholders) or (ii) any modification which, in the
opinion of the Trustee, is of a formal, minor or technical nature or is to correct a manifest error or to
comply with mandatory provisions of law.

A change in English law which governs the Notes may adversely affect Noteholders

The Conditions of the Notes are governed by English law in effect as at the date of issue of the relevant
Notes. No assurance can be given as to the impact of any possible judicial decision or change to English
law or administrative practice after the date of issue of the relevant Notes.

The Notes may be represented by Global Notes and holders of a beneficial interest in a Global Note
must rely on the procedures of the relevant Clearing System(s)

Notes issued under the Programme may be represented by one or more Global Notes. Such Global Notes
will be deposited with a common depositary for Euroclear and Clearstream, Luxembourg, or lodged with
the CMU (each of Euroclear, Clearstream, Luxembourg, and the CMU, a “Clearing System”). Except in
the circumstances described in the relevant Global Note, investors will not be entitled to receive
definitive Notes. The relevant Clearing System(s) will maintain records of the beneficial interests in the
Global Notes. While the Notes are represented by one or more Global Notes, investors will be able to
trade their beneficial interests only through the Clearing Systems.

30
While the Notes are represented by one or more Global Notes, the Issuer, or failing which, the Guarantor
will discharge its payment obligations under the Notes by making payments to the relevant Clearing
System for distribution to their account holders or in the case of the CMU, to the persons for whose
account(s) interests in such Global Note are credited as being held in the CMU in accordance with the
CMU Rules as notified by the CMU to the Guarantor in a relevant CMU Instrument Position Report or
any other notification by the CMU.

A holder of a beneficial interest in a Global Note must rely on the procedures of the relevant Clearing
System(s) to receive payments under the relevant Notes. Neither the Issuer nor the Guarantor has any
responsibility or liability for the records relating to, or payments made in respect of, beneficial interests
in the Global Notes.

Holders of beneficial interests in the Global Notes will not have a direct right to vote in respect of the
relevant Notes. Instead, such holders will be permitted to act only to the extent that they are enabled by
the relevant Clearing System(s) to appoint appropriate proxies. Similarly, holders of beneficial interests
in the Global Notes will not have a direct right under the respective Global Notes to take enforcement
action against the Issuer or the Guarantor in the event of a default under the relevant Notes but will have
to rely upon their rights under the Trust Deed.

Noteholders should be aware that definitive Notes which have a denomination that is not an integral
multiple of the minimum Specified Denomination may be illiquid and difficult to trade

In relation to any issue of Notes which have a denomination consisting of a minimum Specified
Denomination (as defined in the Conditions) plus a higher integral multiple of another smaller amount, it
is possible that the Notes may be traded in amounts in excess of the minimum Specified Denomination
that are not integral multiples of such minimum Specified Denomination. In such a case a Noteholder
who, as a result of trading such amounts, holds a principal amount of less than the minimum Specified
Denomination will not receive a definitive Note in respect of such holding (should definitive Notes be
printed) and would need to purchase a principal amount of Notes such that it holds an amount equal to one
or more Specified Denominations. If definitive Notes are issued, holders should be aware that definitive
Notes which have a denomination that is not an integral multiple of the minimum Specified
Denomination may be illiquid and difficult to trade.

The Issuer is a special purpose company with no business activities of its own and will be dependent on
funds from the Group to make payments under the Notes

The Issuer was established by the Group specifically for the purpose of issuing the Notes and will on-lend
the entire proceeds from the issue of the Notes to the Guarantor and/or other members of the Group. The
Issuer does not and will not have any assets other than such loan receivables and its ability to make
payments under the Notes will depend on its receipt of timely payments under such loan agreement or
other financing arrangements with the Guarantor and/or other members of the Group.

The Guarantor may be unable to make payments on the Guarantee and structural subordination

The Guarantor is a holding company with limited operations of its own and its ability to make payments
under the Guarantee and to make payments to the Issuer under the loan arrangement to fund payments on
the Notes depends upon the receipt of dividends, distributions, interest, loan repayments or advances
from its wholly-owned or partly-owned subsidiaries, associated companies and joint ventures. The ability
of the subsidiaries, joint ventures and associated companies of the Guarantor to pay dividends is subject
to their performance and cash flow requirements and may be subject to applicable laws and regulations.
The outstanding indebtedness of subsidiaries of the Guarantor may contain covenants restricting the
ability of such subsidiaries to pay dividends in certain circumstances for so long as such indebtedness
remains outstanding. Moreover, the Guarantor’s percentage interests in its subsidiaries, joint ventures
and associated companies could be reduced in the future.

As the Guarantor is a holding company, payments under the Guarantee are structurally subordinated to all
existing and future liabilities and obligations of each of the Guarantor’s subsidiaries and associated

31
companies, except for those liabilities and obligations of the Issuer. Claims of creditors of such
companies will have priority as to the assets of such companies over the Guarantor and its creditors,
including holders of the Notes seeking to enforce the Guarantee. The Guarantor’s obligations under the
Guarantee will not be guaranteed by any of its subsidiaries. The Notes do not contain any restrictions on
the ability of the Guarantor’s subsidiaries to incur additional unsecured indebtedness.

The Issuer may be unable to redeem the Notes

On certain dates, including the occurrence of any early redemption event specified in the relevant Pricing
Supplement or otherwise and at maturity of the Notes, the Issuer may, and at maturity, will, be required to
redeem all of the Notes. If such an event were to occur, the Issuer may not have sufficient cash on hand
and may not be able to arrange financing to redeem the Notes in time, or on acceptable terms, or at all.
The ability to redeem the Notes in such event may also be limited by the terms of other debt instruments.
Failure to repay, repurchase or redeem tendered Notes by the Issuer would constitute an event of default
under the Notes, which may also constitute a default under the terms of other indebtedness of the Group.

The Trustee may request that the Noteholders provide an indemnity and/or security and/or prefunding
to its satisfaction

In certain circumstances (including the giving of notice to the Issuer and the Guarantor pursuant to
Condition 10.1), the Trustee may (at its sole discretion) request the Noteholders to provide an indemnity
and/or security, and/or prefunding to its satisfaction before it takes actions on behalf of Noteholders. The
Trustee shall not be obliged to take any such actions if not indemnified and/or secured, and/or prefunded
to its satisfaction. Negotiating and agreeing to any indemnity and/or security, and/or prefunding can be a
lengthy process and may impact on when such actions can be taken. The Trustee may not be able to take
actions notwithstanding the provision of an indemnity or security or prefunding to it, in breach of the
terms of the Trust Deed constituting the Notes and in circumstances where there is uncertainty or dispute
as to the applicable laws or regulations and, to the extent permitted by the agreements and the applicable
law, it will be for the Noteholders to take such actions directly.

Risks relating to the structure of a particular issue of Notes

A wide range of Notes may be issued under the Programme. A number of these Notes may have features
which contain particular risks for potential investors. Set out below is a description of certain such
features:

Notes subject to optional redemption by the Issuer may have a lower market value than Notes that
cannot be redeemed

Unless in the case of any particular Tranche of Notes the relevant Pricing Supplement specifies
otherwise, in the event that the Issuer or the Guarantor would be obliged to increase the amounts payable
in respect of any Notes due to any withholding or deduction for or on account of, any present or future
taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected,
withheld or assessed by or on behalf of the British Virgin Islands or any political subdivision thereof or
any authority therein or thereof having power to tax, the Issuer may redeem all outstanding Notes in
accordance with the Conditions.

An optional redemption feature is likely to limit the market value of Notes. During any period when the
Issuer may elect to redeem Notes, the market value of those Notes generally will not rise substantially
above the price at which they can be redeemed. This also may be true prior to any redemption period.

The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on
the Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at
an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to
do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of other
investments available at that time.

32
Risks relating to Notes which are linked to “benchmarks”

Interest rates and indices which are deemed to be or used as “benchmarks”, are the subject of recent
international regulatory guidance and proposals for reform, particularly in the United Kingdom. Some of
these reforms are already effective whilst others are still to be implemented. These reforms may cause
such benchmarks to perform differently than in the past or to disappear entirely, or have other
consequences which cannot be predicted. Any such consequence could have a material adverse effect on
any Notes linked to or referencing such a benchmark. Regulation (EU) 2016/1011 (the “Benchmarks
Regulation”) was published in the Official Journal of the EU on 29 June 2016 and applied from 1 January
2018 (with the exception of provisions specified in Article 59 (mainly on critical benchmarks) that
applied from 30 June 2016 and 3 July 2016). The Benchmarks Regulation applies to the provision of
benchmarks, the contribution of input data to a benchmark and the use of a benchmark within the EU
(which, for these purposes, includes the United Kingdom). It will, among other things, (i) require
benchmark administrators to be authorised or registered (or, if non-EU-based, to be subject to an
equivalent regime or otherwise recognised or endorsed) and (ii) prevent certain uses by EU supervised
entities of benchmarks of administrators that are not authorised or registered (or, if non-EU based, not
deemed equivalent or recognised or endorsed).

The Benchmarks Regulation could have a material impact on any Notes linked to or referencing a
benchmark, in particular, if the methodology or other terms of the benchmark are changed in order to
comply with the requirements of the Benchmarks Regulation. Such changes could, among other things,
have the effect of reducing, increasing or otherwise affecting the volatility of the published rate or level
of the benchmark.

More broadly, any of the international reforms, particularly in the United Kingdom or the general
increased regulatory scrutiny of benchmarks, could increase the costs and risks of administering or
otherwise participating in the setting of a benchmark and complying with any such regulations or
requirements. For example, the sustainability of the London interbank offered rate (“LIBOR”) has been
questioned as a result of the absence of relevant active underlying markets and possible disincentives
(including as a result of regulatory reforms) for market participants to continue contributing to such
benchmarks. The FCA has indicated through a series of announcement that the continuation of LIBOR on
the current basis cannot and will not be guaranteed after 2021.

Separately, the euro risk free-rate working group for the euro area has published a set of guiding
principles and high level recommendations for fallback provisions in, amongst other things, new euro
denominated cash products (including bonds) referencing EURIBOR. The guiding principles indicate,
among other things, that continuing to reference EURIBOR in relevant contracts (without robust fallback
provisions) may increase the risk to the euro area financial system.

The potential elimination of the LIBOR benchmark or any other benchmark, or changes in the manner of
administration of any benchmark, could require an adjustment to the terms and conditions, or result in
other consequences, in respect of any Notes linked to such benchmark (including but not limited to
Floating Rate Notes whose interest rates are linked to LIBOR). Such factors may have the following
effects on certain benchmarks: (i) discourage market participants from continuing to administer or
contribute to the benchmark; (ii) trigger changes in the rules or methodologies used in the benchmark or
(iii) lead to the disappearance of the “benchmark”. Any of the above changes or any other consequential
changes as a result of international reforms, particularly in the United Kingdom or other initiatives or
investigations, could have a material adverse effect on the value of and return on any Notes linked to or
referencing a benchmark.

The Terms and Conditions of Notes provide for certain fallback arrangements in the event that LIBOR
and/or any page on which such benchmark may be published (or any other successor service) becomes
unavailable or a Benchmark Event (as defined in the Terms and Conditions) otherwise occurs. Such
fallback arrangements include the possibility that the Rate of Interest could be set by reference to a
Successor Rate or an Alternative Reference Rate (both as defined in the Terms and Conditions), with or
without the application of an adjustment spread and may include amendments to the Terms and
Conditions of the Notes to ensure the proper operation of the successor or replacement benchmark, all as

33
determined by the Issuer (acting in good faith and in consultation with an Independent Adviser). An
adjustment spread, if applied could be positive or negative and would be applied with a view to reducing
or eliminating, to the fullest extent reasonably practicable in the circumstances, any economic prejudice
or benefit (as applicable) to investors arising out of the replacement of the relevant benchmark. However,
it may not be possible to determine or apply an adjustment spread and even if an adjustment is applied,
such adjustment spread may not be effective to reduce or eliminate economic prejudice to investors. If no
adjustment spread can be determined, a Successor Rate or Alternative Reference Rate may nonetheless be
used to determine the Rate of Interest. The use of a Successor Rate or Alternative Reference Rate
(including with the application of an adjustment spread) will still result in any Notes linked to or
referencing a Reference Rate performing differently (which may include payment of a lower Rate of
Interest) than they would if the relevant benchmark were to continue to apply in its current form.

If, following the occurrence of a Benchmark Event, no Successor Rate or Alternative Reference Rate is
determined, the ultimate fallback for the purposes of calculation of the Rate of Interest for a particular
Interest Period may result in the Rate of Interest for the last preceding Interest Period being used. This
may result in the effective application of a fixed rate for Floating Rate Notes based on the rate which was
last observed on the Relevant Screen Page. Due to the uncertainty concerning the availability of
Successor Rates and Alternative Reference Rates, the involvement of an Independent Adviser and the
potential for further regulatory developments there is a risk that the relevant fallback provisions may not
operate as intended at the relevant time.

Investors should consult their own independent advisers and make their own assessment about the
potential risks imposed by the Benchmarks Regulation or any other international reforms, particularly in
the United Kingdom, in making any investment decision with respect to any Notes linked to or
referencing a benchmark.

Future discontinuance of LIBOR may adversely affect the value of Floating Rate Notes which
reference LIBOR

On 27 July 2017, the Chief Executive of the United Kingdom Financial Conduct Authority, which
regulates LIBOR, announced that it does not intend to continue to persuade, or use its powers to compel,
panel banks to submit rates for the calculation of LIBOR to the administrator of LIBOR after 2021. The
announcement indicates that the continuation of LIBOR on the current basis is not guaranteed after 2021.
It is not possible to predict whether, and to what extent, panel banks will continue to provide LIBOR
submissions to the administrator of LIBOR going forwards. This may cause LIBOR to perform
differently than it did in the past and may have other consequences that cannot be predicted.

Investors should be aware that, if LIBOR were discontinued or otherwise unavailable, the rate of interest
on Floating Rate Notes which reference LIBOR will be determined for the relevant period by the fallback
provisions applicable to such Notes. Depending on the manner in which the LIBOR rate is to be
determined under the Terms and Conditions of the Notes, this may in certain circumstances (i) be reliant
upon the provision by reference banks of offered quotations for the LIBOR rate which, depending on
market circumstances, may not be available at the relevant time or (ii) result in the effective application
of a fixed rate based on the rate which applied in the previous period when LIBOR was available. Any of
the foregoing could have an adverse effect on the value or liquidity of, and return on, any Floating Rate
Notes which reference LIBOR.

Index Linked Notes and Dual Currency Notes have features which are different from single currency
issues

The Issuer may issue Notes with principal or interest determined by reference to an index or formula, to
changes in the prices of securities or commodities, to movements in currency exchange rates or other
factors (each, a “Relevant Factor”). In addition, the Issuer may issue Notes with principal or interest
payable in one or more currencies which may be different from the currency in which the Notes are
denominated. Potential investors should be aware that:

(i) the market price of such Notes may be volatile;

34
(ii) they may receive no interest;

(iii) payment of principal or interest may occur at a different time or in a different currency than
expected;

(iv) they may lose all or a substantial portion of their principal;

(v) a Relevant Factor may be subject to significant fluctuations that may not correlate with changes in
interest rates, currencies or other indices;

(vi) if a Relevant Factor is applied to Notes in conjunction with a multiplier greater than one or contains
some other leverage factor, the effect of changes in the Relevant Factor on principal or interest
payable likely will be magnified; and

(vii) the timing of changes in a Relevant Factor may affect the actual yield to investors, even if the
average level is consistent with their expectations. In general, the earlier the change in the Relevant
Factor, the greater the effect on yield.

The historical experience of an index or other Relevant Factor should not be viewed as an indication of
the future performance of such Relevant Factor during the term of any Notes. Accordingly, each potential
investor should consult its own financial and legal advisers about the risk entailed by an investment in any
Notes linked to a Relevant Factor and the suitability of such Notes in light of its particular circumstances.

Failure by an investor to pay a subsequent instalment of partly-paid Notes may result in an investor
losing all of its investment

The Issuer may issue Notes where the issue price is payable in more than one instalment. Failure to pay
any subsequent instalments could result in an investor losing all of its investment.

The market price of variable rate Notes with a multiplier or other leverage factor may be volatile

Notes with variable interest rates can be volatile securities. If they are structured to include multipliers or
other leverage factors, or caps or floors, or any combination of those features or other similar related
features, their market values may be even more volatile than those for securities that do not include such
features.

Inverse Floating Rate Notes are typically more volatile than conventional floating rate debt

Inverse Floating Rate Notes have an interest rate equal to a fixed rate minus a rate based upon a reference
rate such as LIBOR. The market values of such Notes typically are more volatile than market values of
other conventional floating rate debt securities based on the same reference rate (and with otherwise
comparable terms). Inverse Floating Rate Notes are more volatile because an increase in the reference
rate not only decreases the interest rate of the Notes, but may also reflect an increase in prevailing interest
rates, which further adversely affects the market value of these Notes.

Notes carrying an interest rate which may be converted from fixed to floating interest rates and
vice-versa, may have lower market values than other Notes

Fixed/Floating Rate Notes may bear interest at a rate that the Issuer may elect to convert from a fixed rate
to a floating rate, or from a floating rate to a fixed rate. The Issuer’s ability to convert the interest rate will
affect the secondary market and the market value of such Notes since the Issuer may be expected to
convert the rate when it is likely to produce a lower overall cost of borrowing. If the Issuer converts from
a fixed rate to a floating rate, the spread on the Fixed/Floating Rate Notes may be less favourable than
then prevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition,
the new floating rate at any time may be lower than the rates on other Notes. If the Issuer converts from
a floating rate to a fixed rate, the fixed rate may be lower than then prevailing rates on its Notes.

35
The market prices of Notes issued at a substantial discount or premium tend to fluctuate more in
relation to general changes in interest rates than do prices for conventional interest-bearing securities

The market values of securities issued at a substantial discount or premium to their nominal amount tend
to fluctuate more in relation to general changes in interest rates than do prices for conventional
interest-bearing securities. Generally, the longer the remaining term of the securities, the greater the
price volatility as compared to conventional interest-bearing securities with comparable maturities.

Investors may lose part or all of their investment in any Index-Linked Notes issued

If, in the case of a particular Tranche of Notes, the relevant Pricing Supplement specifies that the Notes
are Index-Linked Notes or variable redemption amount Notes, there is a risk that the investor may lose the
value of its entire investment or part of it.

Risks relating to the market generally

Set out below is a brief description of certain market risks, including liquidity risk, exchange rate risk,
interest rate risk and credit risk:

Notes issued under the Programme have no current active trading market and may trade at a discount
to their initial offering price and/or with limited liquidity

Notes issued under the Programme will be new securities which may not be widely distributed and for
which there is currently no active trading market (unless in the case of any particular Tranche, such
Tranche is to be consolidated with and form a single series with a Tranche of Notes which is already
issued). If the Notes are traded after their initial issuance, they may trade at a discount to their initial
offering price, depending upon prevailing interest rates, the market for similar securities, general
economic conditions and the financial condition of the Issuer. If the Notes are trading at a discount,
investors may not be able to receive a favourable price for their Notes, and in some circumstances
investors may not be able to sell their Notes at all or at their fair market value. Although application will
be made for the Notes issued under the Programme to be admitted to listing on the SGX-ST, there is no
assurance that the application to list a particular series of Notes will be approved, that any particular
Tranche of Notes will be so admitted or that an active trading market will develop. In addition, the market
for investment grade and crossover grade debt has been subject to disruptions that have caused volatility
in prices of securities similar to the Notes issued under the Programme. Accordingly, there is no
assurance as to the development or liquidity of any trading market, or that disruptions will not occur, for
any particular Tranche of Notes.

Exchange rate risks and exchange controls may result in investors receiving less interest or principal
than expected

The Issuer will pay principal and interest on the Notes in the currency specified in the relevant Pricing
Supplement (the “Specified Currency”). This presents certain risks relating to currency conversions if
an investor’s financial activities are denominated principally in a currency or currency unit (the
“Investor’s Currency”) other than the Specified Currency. These include the risk that exchange rates
may significantly change (including changes due to devaluation of the Specified Currency or revaluation
of the Investor’s Currency) and the risk that authorities with jurisdiction over the Investor’s Currency may
impose or modify exchange controls. An appreciation in the value of the Investor’s Currency relative to
the Specified Currency would decrease (1) the Investor’s Currency equivalent yield on the Notes, (2) the
Investor’s Currency equivalent value of the principal payable on the Notes and (3) the Investor’s Currency
equivalent market value of the Notes.

Government and monetary authorities may impose (as some have done in the past) exchange controls that
could adversely affect an applicable exchange rate. As a result, investors may receive less interest or
principal than expected, or no interest or principal.

Changes in market interest rates may adversely affect the value of Fixed Rate Notes

Investment in Fixed Rate Notes involves the risk that subsequent changes in market interest rates may
adversely affect the value of Fixed Rate Notes.

36
The credit ratings assigned to the Notes may not reflect all risks

One or more independent credit rating agencies may assign credit ratings to an issue of Notes. The ratings
may not reflect the potential impact of all risks related to structure, market, additional factors discussed
above and other factors that may affect the value of the Notes. A credit rating is not a recommendation to
buy, sell or hold securities and may be revised, suspended or withdrawn by the rating agency at any time.

Risks Relating to Renminbi-denominated Notes

Notes denominated in Renminbi (“Renminbi Notes”) may be issued under the Programme. Renminbi
Notes contain particular risks for potential investors, including:

Renminbi is not completely freely convertible; there are still significant restrictions on remittance of
Renminbi into or outside the PRC which may adversely affect the liquidity of Renminbi Notes

Renminbi is not completely freely convertible at present. The government of the PRC (the “PRC
Government”) continues to regulate conversion between Renminbi and foreign currencies despite
significant reduction over the years by the PRC government of control over trade transactions involving
import and export of goods and services as well as other frequent routine foreign exchange transactions.
These transactions are known as current account items. However, remittance of Renminbi by foreign
investors into and out of the PRC for the purposes of capital account items, such as capital contributions,
is generally only permitted upon obtaining specific approvals from, or completing specific registrations
or filings with, the relevant authorities on a case-by-case basis and is subject to a strict monitoring
system. Regulations in the PRC on the remittance of Renminbi into the PRC for settlement of capital
account items are developing gradually.

Although starting from 1 October 2016, the Renminbi has been added to the Special Drawing Rights
basket created by the International Monetary Fund and policies further improving accessibility to
Renminbi to settle cross-border transactions in foreign currencies were implemented by the PBOC in
2018, there is no assurance that the PRC Government will liberalise control over cross-border remittance
of Renminbi in the future or that new regulations in the PRC will not be promulgated in the future which
have the effect of restricting or eliminating the remittance of Renminbi into or outside the PRC. In the
event that funds cannot be repatriated outside the PRC in Renminbi, this may affect the overall
availability of Renminbi outside the PRC and the ability of the Issuer or the Guarantor to source
Renminbi to finance their respective obligations under Renminbi Notes.

There is only limited availability of Renminbi outside the PRC which may affect the liquidity of
Renminbi Notes and the Issuer’s and the Guarantor’s ability to source Renminbi outside the PRC to
service such Renminbi Notes

As a result of the restrictions imposed by the PRC Government on cross-border Renminbi fund flows, the
availability of Renminbi outside the PRC is limited. While the PBOC has entered into agreements on the
clearing of Renminbi business with financial institutions in a number of financial centres and cities (the
“RMB Clearing Banks”), including but not limited to Hong Kong and are in the process of establishing
Renminbi clearing and settlement mechanisms in several other jurisdictions (the “Settlement
Arrangements”), the current size of Renminbi-denominated financial assets outside the PRC is limited.
There are restrictions imposed by the PBOC on the Renminbi business participating banks in respect of
cross-border Renminbi settlement, such as those relating to direct transactions with the PRC enterprises.
Renminbi business participating banks do not have direct Renminbi liquidity support from the PBOC.
The relevant RMB Clearing Banks only have access to onshore liquidity support from the PBOC for the
purpose of squaring open positions of participating banks for limited types of transactions. The relevant
RMB Clearing Bank is not obliged to square for participating banks any open positions resulting from
other foreign exchange transactions or conversion services and the participating banks will need to source
Renminbi from outside the PRC to square such open positions.

Although it is expected that the offshore Renminbi market will continue to grow in depth and size, its
growth is subject to many constraints as a result of PRC laws and regulations on foreign exchange. There

37
is no assurance that new PRC regulations will not be promulgated or the settlement agreements will not
be terminated or amended in the future which will have the effect of restricting availability of Renminbi
outside the PRC. The limited availability of Renminbi outside the PRC may affect the liquidity of
Renminbi Notes. To the extent the Issuer is required to source Renminbi outside the PRC to service the
Renminbi Notes, there is no assurance that the Issuer will be able to source such Renminbi on satisfactory
terms, if at all.

Investment in Renminbi Notes is subject to exchange rate risks

The value of the Renminbi against the U.S. dollar and other foreign currencies fluctuates from time to
time and is affected by changes in the PRC and international political and economic conditions and by
many other factors. In August 2015, the PBOC implemented changes to the way it calculates the midpoint
against the U.S. dollar to take into account market-maker quotes before announcing the daily midpoint.
This change, among others that may be implemented, may increase the volatility in the value of the
Renminbi against other currencies. All payments of interest and principal with respect to Renminbi Notes
will be made in Renminbi. As a result, the value of these Renminbi payments in U.S. dollar terms may
vary with the prevailing exchange rates in the marketplace. If the value of Renminbi depreciates against
the U.S. dollar or other foreign currencies, the value of investment in U.S. dollar or other applicable
foreign currency terms will decline.

An investment in Renminbi Notes is subject to interest rate risks

The PRC Government has gradually liberalised the regulation of interest rates in recent years. Further
liberalisation may increase interest rate volatility. The Renminbi Notes may carry a fixed interest rate.
Consequently, the trading price of such Renminbi Notes will vary with fluctuations in interest rates. If a
holder of Renminbi Notes tries to sell any Renminbi Notes before their maturity, they may receive an
offer that is less than the amount invested.

Payments in respect of Renminbi Notes will only be made to investors in the manner specified in such
Renminbi Notes

All payments to investors in respect of the Renminbi Notes will be made solely (i) for so long as the
Renminbi Notes are represented by Global Notes held with the common depositary for Euroclear and
Clearstream, Luxembourg or any alternative clearing system, by transfer to a Renminbi bank account
maintained in Hong Kong in accordance with Euroclear and/or Clearstream, Luxembourg rules and
procedures, or (ii) for so long as the Renminbi Notes are in definitive form, by transfer to a Renminbi
bank account maintained in Hong Kong in accordance with prevailing rules and regulations. Other than
described in the Conditions, the Issuer and the Guarantor cannot be required to make payment by any
other means (including in any other currency or in bank notes, by cheque or draft or by transfer to a bank
account in the PRC).

Investment in Renminbi Notes may be subject to PRC tax

In considering whether to invest in the Renminbi Notes, investors should consult their individual tax
advisers with regard to the application of PRC tax laws to their particular situations as well as any tax
consequences arising under the laws of any other tax jurisdictions. The value of a Noteholder’s
investment in the Renminbi Notes may be materially and adversely affected if such Noteholder is
required to pay PRC tax with respect to acquiring, holding or disposing of and receiving payments under
those Renminbi Notes.

38
 FORM OF THE NOTES

The Notes of each Series will be in either bearer form, with or without interest coupons (“Coupons”)
attached, or registered form, without Coupons attached. Bearer Notes and Registered Notes will be issued
outside the United States (and in the case of Notes offered or sold in reliance on Category 2 of Regulation
S, to non-U.S. persons outside the United States) in reliance on Regulation S.

Notes to be listed on the SGX-ST will be accepted for clearance through Euroclear and Clearstream,
Luxembourg and may also be accepted for clearance through the CMU and/or any other clearing system
as specified in the applicable Pricing Supplement.

Bearer Notes

Each Tranche of Bearer Notes will be initially issued in the form of either a Temporary Bearer Global
Note or a Permanent Bearer Global Note (collectively, the “Bearer Global Notes” and each a “Bearer
Global Note”) as indicated in the applicable Pricing Supplement, which, in either case, will be delivered
on or prior to the original issue date of the Tranche to either (i) a common depositary (the “Common
Depositary”) for Euroclear and Clearstream, Luxembourg or (ii) a sub-custodian for the Hong Kong
Monetary Authority (“HKMA”), as operator of the CMU. Whilst any Bearer Note is represented by a
Temporary Bearer Global Note, payments of principal, interest (if any) and any other amount payable in
respect of the Notes due prior to the Exchange Date (as defined below) will be made against presentation
of the Temporary Bearer Global Note only to the extent that certification (in a form to be provided) to the
effect that the beneficial owners of interests in such Bearer Note are not U.S. persons or persons who have
purchased for resale to any U.S. person, as required by U.S. Treasury regulations, has been received by
Euroclear and/or Clearstream, Luxembourg and/or The Hongkong and Shanghai Banking Corporation
Limited (the “CMU Lodging Agent”) and (in the case of a Temporary Bearer Global Note delivered to a
Common Depositary for Euroclear and Clearstream, Luxembourg) Euroclear and/or Clearstream,
Luxembourg, as applicable, has given a like certification (based on the certifications it has received) to
the Principal Paying Agent (as defined under “Terms and Conditions of the Notes”).

On and after the date (the “Exchange Date”) which, for each Tranche in respect of which a Temporary
Bearer Global Note is issued, is 40 days after the Temporary Bearer Global Note is issued, interests in
such Temporary Bearer Global Note will be exchangeable (free of charge) in whole or in part (if the
clearing systems permit) upon a request as described therein either for (i) interests in a Permanent Bearer
Global Note of the same Series or (ii) definitive Bearer Notes of the same Series with, where applicable,
receipts, interest coupons and talons attached (as indicated in the applicable Pricing Supplement and
subject, in the case of definitive Bearer Notes, to such notice period as is specified in the applicable
Pricing Supplement), in each case against certification of beneficial ownership as described above, unless
such certification has already been given. The CMU may require that any such exchange for a Permanent
Global Bearer Note is made in whole and not in part and in such event, no such exchange will be effected
until all relevant account holders (as set out in a CMU Instrument Position Report (as defined in the rules
of the CMU) or any other relevant notification supplied to the CMU Lodging Agent by the CMU) have so
certified. The CMU may require the issue and deposit of such Permanent Bearer Global Note with its
sub-custodian without permitting the withdrawal of the Temporary Bearer Global Note so exchanged,
although any interests thereon exchanged shall have been properly effected in its records.

The holder of a Temporary Bearer Global Note will not be entitled to collect any payment of interest,
principal or other amount due on or after the Exchange Date unless, upon due certification, exchange of
the Temporary Bearer Global Note for an interest in a Permanent Bearer Global Note or for definitive
Bearer Notes is improperly withheld or refused. Payments of principal, interest (if any) or any other
amounts on a Permanent Bearer Global Note will be made through Euroclear and/or Clearstream,
Luxembourg against presentation or surrender (as the case may be) of the Permanent Bearer Global Note
without any requirement for certification.

In respect of a Bearer Global Note held through the CMU, any payments of principal, interest (if any) or
any other amounts shall be made to the person(s) for whose account(s) interests in the relevant Bearer

39
Global Note are credited (as set out in a CMU Instrument Position Report or any other relevant
notification supplied to the CMU Lodging Agent by the CMU) and, save in the case of final payment, no
presentation of the relevant Bearer Global Note shall be required for such purpose.

Payments of principal, interest (if any) or any other amounts on a Bearer Global Note will be calculated
in respect of the total aggregate amount of the Notes represented by the Bearer Global Note.

The applicable Pricing Supplement will specify that a Permanent Bearer Global Note will be
exchangeable (free of charge), in whole but not in part, for definitive Bearer Notes with, where
applicable, receipts, interest coupons and talons, attached upon either (i) not less than 60 days’ written
notice (a), in the case of Notes held by a Common Depositary for Euroclear and/or Clearstream,
Luxembourg, from Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder
of an interest in such Permanent Bearer Global Note) to the Principal Paying Agent as described therein
and/or (b), in the case of Notes held through the CMU, from the relevant account holders therein to the
CMU Lodging Agent as described therein, or (ii) only upon the occurrence of an Exchange Event.

For these purposes, “Exchange Event” means that (i) an Event of Default (as defined in Condition 10) has
occurred and is continuing, (ii) the Issuer has been notified that both Euroclear and Clearstream,
Luxembourg and, in the case of Notes cleared through the CMU, the CMU have been closed for business
for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have
announced an intention permanently to cease business or have in fact done so and, in any case, no
successor clearing system satisfactory to the Trustee is available or (iii) the Issuer has or will become
subject to adverse tax consequences which would not be suffered were the Notes in definitive form and a
certificate to such effect signed by two directors of the Issuer has been given to the Trustee. The Issuer
will promptly give notice to Noteholders in accordance with Condition 14 if an Exchange Event occurs.
In the event of the occurrence of an Exchange Event, (a) in the case of Notes held by a Common
Depositary for Euroclear and/or Clearstream, Luxembourg, Euroclear and/or Clearstream, Luxembourg
(acting on the instructions of any holder of an interest in such Permanent Bearer Global Note) or, (b) in
the case of Notes held through the CMU, the relevant account holders therein or, in either case, the
Trustee may give notice to the Principal Paying Agent or, as the case may be, the CMU Lodging Agent
requesting exchange and, in the event of the occurrence of an Exchange Event as described in (iii) above,
the Issuer may also give notice to the Principal Paying Agent or, as the case may be, the CMU Lodging
Agent requesting exchange. Any such exchange shall occur not later than 45 days after the date of receipt
of the first relevant notice by the Principal Paying Agent or, as the case may be, the CMU Lodging Agent.

The following legend will appear on all Bearer Notes (other than Temporary Bearer Global Note) receipts
and interest coupons relating to such Notes where TEFRA D is specified in the applicable Pricing
Supplement:

“ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE
LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE
CODE.”

The sections referred to provide that United States holders, with certain exceptions, will not be entitled to
deduct any loss on Bearer Notes, receipts or interest coupons and will not be entitled to capital gains
treatment of any gain on any sale, disposition, redemption or payment of principal in respect of such
Notes, receipts or interest coupons.

Notes which are represented by a Bearer Global Note will only be transferable in accordance with the
rules and procedures for the time being of Euroclear, Clearstream, Luxembourg or the CMU, as the case
may be.

For the purpose of any payments made in respect of a Bearer Global Note, the relevant place of
presentation shall be disregarded in the definition of “Payment Day” set out in Condition 6.6.

Registered Notes

The Registered Notes of each Tranche will initially be represented by a Registered Global Note. Prior to
expiry of the distribution compliance period (as defined in Regulation S), if any, applicable to each

40
Tranche of Notes, beneficial interests in a Registered Global Note may not be offered or sold to, or for the
account or benefit of, a U.S. person save as otherwise provided in Condition 2 and may not be held
otherwise than through Euroclear or Clearstream, Luxembourg or the CMU and such Registered Global
Note will bear a legend regarding such restrictions on transfer.

Registered Global Notes will (i) be deposited with, and registered in the name of a nominee of, a Common
Depositary for Euroclear and Clearstream, Luxembourg or (ii) be deposited with a sub-custodian for and
registered in the name of the HKMA as operator of the CMU, as specified in the applicable Pricing
Supplement. Persons holding beneficial interests in Registered Global Notes will be entitled or required,
as the case may be, under the circumstances described below, to receive physical delivery of definitive
Notes in fully registered form.

Payments of principal, interest and any other amount in respect of the Registered Global Notes will, in the
absence of provision to the contrary, be made to the person shown on the Register (as defined in
Condition 6.4) as the registered holder of the Registered Global Notes with calculation made in respect of
the total aggregate amount of the Notes represented by the Registered Global Note. at the close of
business on the relevant Record Date. None of the Issuer, the Guarantor, the Trustee, the Principal Paying
Agent, any Paying Agent or the Registrar will have any responsibility or liability for any aspect of the
records relating to or payments or deliveries made on account of beneficial ownership interests in the
Registered Global Notes or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.

Payments of principal, interest or any other amount in respect of the Registered Notes will, in the absence
of provision to the contrary, be made to the persons shown on the Register on the relevant Record Date (as
defined in Condition 6.4) immediately preceding the due date for payment in the manner provided in that
Condition.

All payments in respect of Notes represented by a Registered Global Note will be made to, or to the order
of, the person whose name is entered on the Register at the close of business on the clearing system
business day (being a day on which the relevant clearing system is open for business) immediately prior
to the date for payment.

Interests in a Registered Global Note will be exchangeable (without charge to any holder, but against such
indemnity as the Registrar may require in respect of any tax or other duty of whatsoever nature which may
be levied or imposed in connection with such exchange), in whole but not in part, for definitive
Registered Notes without receipts, interest coupons or talons attached only upon the occurrence of an
Exchange Event. For these purposes, “Exchange Event” means that (i) an Event of Default has occurred
and is continuing, (ii) the Issuer has been notified that both Euroclear and Clearstream, Luxembourg and,
in the case of Notes cleared through the CMU, the CMU have been closed for business for a continuous
period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention
permanently to cease business or have in fact done so and, in any case, no successor clearing system
satisfactory to the Trustee is available or (iii) the Issuer has or will become subject to adverse tax
consequences which would not be suffered were the Notes in definitive form. The Issuer will promptly
give notice to Noteholders in accordance with Condition 14 if an Exchange Event occurs. In the event of
the occurrence of an Exchange Event, (a) in the case of Notes registered in the name of a nominee for a
Common Depositary for Euroclear and/or Clearstream, Luxembourg, Euroclear and/or Clearstream,
Luxembourg (acting on the instructions of any holder of an interest in such Registered Global Note)
and/or, (b) in the case of Notes held through the CMU, the relevant account holders therein, may give
notice to the Registrar or, as the case may be, the CMU Lodging Agent requesting exchange and, in the
event of the occurrence of an Exchange Event as described in (iii) above, the Issuer may also give notice
to the Registrar or, as the case may be, the CMU Lodging Agent requesting exchange. Any such exchange
shall occur not later than 10 days after the date of receipt of the first relevant notice by the Registrar or,
as the case may be, the CMU Lodging Agent.

41
Notices

All notices regarding Notes in bearer form will be deemed to be validly given if published in a daily
newspaper having general circulation in Hong Kong, or if such publication shall not be practicable, in a
daily newspaper with general circulation in Asia as notified to the Trustee. It is expected that such
publication will be made in the Asian Wall Street Journal. The Issuer shall also ensure that notices are
duly published in a manner which complies with the rules and regulations of any stock exchange or any
other relevant authority on which the Notes in bearer form are for the time being listed. Any such notice
will be deemed to have been given on the date of the first publication or, where required to be published
in more than one newspaper, on the date of the first publication in all required newspapers. If publication
as provided above is not practicable, a notice will be given in such other manner, and will be deemed to
have been given on such date, as the Trustee shall approve.

All notices regarding Notes in registered form will be deemed to be validly given if (a) sent by first class
mail or (if posted to an address overseas) by airmail to the holders (or the first named of joint holders) at
their respective addresses recorded in the Register and will be deemed to have been given on the day after
mailing and (b) if and for so long as any Notes in registered form are listed on a stock exchange or are
admitted to trading by another relevant authority and the rules of that stock exchange or relevant authority
so require, such notice will be published in a daily newspaper having general circulation in the place or
places required by those rules.

Until such time as any Notes in definitive form are issued, there may, so long as any Global Notes
representing the Notes are held in their entirety on behalf of (i) Euroclear and/or Clearstream,
Luxembourg, be substituted for such publication in such newspaper(s) the delivery of the relevant notice
to Euroclear and/or Clearstream, Luxembourg for communication by them to the holders of the Notes or
(ii) the CMU, be substituted for such publication in such newspaper(s) the delivery of the relevant notice
to the persons shown in a CMU Instrument Position Report issued by the CMU on the first business day
preceding the date of despatch of such notice as holding interests in the relevant Global Note and, in the
case of both (i) and (ii) above, such notice shall be deemed to have been given to the Noteholders on the
date of delivery to Euroclear or Clearstream, Luxembourg or the CMU as the case may be and, in
addition, in the case of both (i) and (ii) above, for so long as any Notes are listed on a stock exchange or
are admitted to trading by another relevant authority and the rules of that stock exchange or relevant
authority so require, such notice will be published in a daily newspaper of general circulation in the place
or places required by those rules. Any such notice shall be deemed to have been given to the holders of the
Notes on the fourth day after the day on which the said notice was given to Euroclear and/or Clearstream,
Luxembourg and/or the persons shown in the relevant CMU Instrument Position Report.

Notices to be given by any Noteholder shall be in writing and given by lodging the same, together (in the
case of any Note in definitive form) with the relative Note or Notes, with the Principal Paying Agent (in
the case of Notes in bearer form) or the Registrar (in the case of Notes in registered form). Whilst any of
the Notes are represented by a Global Note, such notice may be given by any holder of a Note to the
Principal Paying Agent or the Registrar through Euroclear and/or Clearstream, Luxembourg, and/or, in
the case of Notes lodged with the CMU, by delivery by such holder of such notice to the CMU Lodging
Agent in Hong Kong, as the case may be, in such manner as the Principal Paying Agent, the Registrar, the
CMU Lodging Agent and Euroclear and/or Clearstream, Luxembourg and/or the CMU, as the case may
be, may approve for this purpose.

Receiptholders and Couponholders will be deemed for all purposes to have notice of the contents of any
notice given to the Noteholders in accordance with the Conditions.

Transfer of Interests

Interests in a Registered Global Note may, subject to compliance with all applicable restrictions, be
transferred to a person who wishes to hold such interest in another Registered Global Note. No beneficial
owner of an interest in a Registered Global Note will be able to transfer such interest, except in
accordance with the applicable procedures of Euroclear, Clearstream, Luxembourg and the CMU, in each
case to the extent applicable.

42
General

Pursuant to the Agency Agreement (as defined under “Terms and Conditions of the Notes”), the Principal
Paying Agent or, as the case may be, the CMU Lodging Agent shall, if applicable, arrange that, where a
further Tranche of Notes is issued which is intended to form a single Series with an existing Tranche of
Notes, the Notes of such further Tranche shall be assigned a common code and ISIN and, where
applicable, a CMU instrument number which are different from the common code, ISIN and CMU
instrument number assigned to Notes of any other Tranche of the same Series until at least the expiry of
the distribution compliance period (as defined in Regulation S) applicable to the Notes of such Tranche.

For so long as any of the Notes is represented by a Global Note held on behalf of Euroclear, Clearstream,
Luxembourg or the CMU, each person (other than Euroclear, Clearstream, Luxembourg or the CMU) who
is for the time being shown in the records of Euroclear, Clearstream, Luxembourg or the CMU as the
holder of a particular nominal amount of such Notes (in which regard any certificate or other document
issued by Euroclear, Clearstream, Luxembourg or the CMU as to the nominal amount of such Notes
standing to the account of any person shall be conclusive and binding for all purposes save in the case of
manifest error) shall be treated by the Issuer, the Guarantor, the Trustee and their agents as the holder of
such nominal amount of such Notes for all purposes other than with respect to the payment of principal or
interest on such nominal amount of such Notes, for which purpose the bearer of the relevant Bearer
Global Note or the registered holder of the relevant Registered Global Note shall be treated by the Issuer,
the Guarantor, the Trustee and their agents as the holder of such nominal amount of such Notes in
accordance with and subject to the terms of the relevant Global Note and the expressions “Noteholder”
and “holder of Notes” and related expressions shall be construed accordingly. Notwithstanding the above,
if a Note (whether in global or definitive form) is held through the CMU, any payment that is made in
respect of such Note shall be made at the direction of the bearer or the registered holder to the person(s)
for whose account(s) interests in such Note are credited as being held through the CMU in accordance
with the CMU Rules (as defined in the Agency Agreement) at the relevant time as notified to the CMU
Lodging Agent by the CMU in a relevant CMU Instrument Position Report or any other relevant
notification by the CMU (which notification, in either case, shall be conclusive evidence of the records of
the CMU as to the identity of any accountholder and the principal amount of any Note credited to its
account, save in the case of manifest error) and such payments shall discharge the obligation of the Issuer
in respect of that payment under such Note.

Any reference herein to Euroclear and/or Clearstream, Luxembourg and/or the CMU shall, whenever the
context so permits, be deemed to include a reference to any additional or alternative clearing system
specified in the applicable Pricing Supplement or otherwise approved by the Issuer, the Guarantor, the
Principal Paying Agent, the Trustee and, as applicable, the Registrar. No Noteholder, Receiptholder or
Couponholder (as defined under “Terms and Conditions of the Notes”) shall be entitled to proceed
directly against the Issuer or the Guarantor unless the Trustee, having become bound so to proceed, fails
so to do within a reasonable period and the failure shall be continuing.

For so long as any Notes are listed on the SGX-ST and the rules of the SGX-ST so require, the Issuer shall
appoint and maintain a paying agent in Singapore, where such Notes may be presented or surrendered for
payment or redemption, in the event that the Global Note(s) representing such Notes is exchanged for
definitive Notes. In addition, in the event that the Global Note(s) is exchanged for definitive Notes, an
announcement of such exchange will be made by or on behalf of the Issuer through the SGX-ST and such
announcement will include all material information with respect to the delivery of the definitive Notes,
including details of the paying agent in Singapore.

43
 FORM OF PRICING SUPPLEMENT

The form of Pricing Supplement that will be issued in respect of each Tranche, subject only to the deletion
of non-applicable provisions, is set out below:

[MiFID II Product governance/Professional investors and ECPs only target market — Solely for the
purposes of [the/each] manufacturer’s product approval process, the target market assessment in respect
of the Notes has led to the conclusion that: (i) the target market for the Notes is eligible counterparties
and professional clients only, each as defined in Directive 2014/65/EU (as amended, “MiFID II”); and
(ii) all channels for distribution of the Notes to eligible counterparties and professional clients are
appropriate. Any person subsequently offering, selling or recommending the Notes (a “distributor”)
should take into consideration the manufacturer[‘s/s’] target market assessment; however, a distributor
subject to MiFID II is responsible for undertaking its own target market assessment in respect of the
Notes (by either adopting or refining the manufacturer[‘s/s’] target market assessment) and determining
appropriate distribution channels.]

PROHIBITION OF SALES TO EEA AND UK RETAIL INVESTORS — The Notes are not intended
to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made
available to any retail investor in the European Economic Area (“EEA”) or in the United Kingdom (the
“UK”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as
defined in point (11) of Article 4(1) of MiFID II; (ii) a customer within the meaning of Directive (EU)
2016/97 (“IDD”), where that customer would not qualify as a professional client as defined in point (10)
of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (the
“Prospectus Regulation”). Consequently no key information document required by Regulation (EU) No
1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the Notes or otherwise making
them available to retail investors in the EEA or in the UK has been prepared and therefore offering or
selling the Notes or otherwise making them available to any retail investor in the EEA or in the UK may
be unlawful under the PRIIPs Regulation.

[In connection with Section 309B of the Securities and Futures Act (Chapter 289) of Singapore, as
amended or modified from time to time (the “SFA”) and the Securities and Futures (Capital Markets
Products) Regulations 2018 of Singapore (the “CMP Regulations 2018”), the Issuer has determined, and
hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA), that the Notes are
[prescribed capital markets products] / [capital markets products other than prescribed capital markets
products] (as defined in the CMP Regulations 2018) and [are] [Excluded] / [Specified] Investment
Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS
Notice FAA-N16: Notice on Recommendation on Investment Products.] 1

[Date]

Nan Fung Treasury Limited

Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes]

Guaranteed by Nan Fung International Holdings Limited
under its US$3,000,000,000
Medium Term Note Programme

This document constitutes the Pricing Supplement relating to the issue of Notes described herein. Terms
used herein shall be deemed to be defined as such for the purposes of the Conditions (the “Conditions”)
set forth in the offering circular dated [●] 2020 [as supplemented by the supplement[s] dated [date[s]]
(the “Offering Circular”). This Pricing Supplement contains the final terms of the Notes and must be
read in conjunction with such Offering Circular. Full information on the Issuer, the Guarantor and the
offer of the Notes is only available on the basis of the combination of this Pricing Supplement and the
Offering Circular.

1
For any Notes to be offered to Singapore investors, the Issuer to consider whether it needs to re-classify the Notes pursuant
to Section 309B of the SFA prior to the launch of the offer.

44
[N.B. If the Issuer has prepared any unaudited, but reviewed, condensed consolidated financial
statements dated as at a date, or for a period ending, subsequent to the financial statements appearing
in the latest Offering Circular, ensure that such financial statements are provided to potential investors
of the relevant series of Notes as soon as practicable upon announcement of the deal.]

[The following alternative language applies if the first tranche of an issue which is being increased was
issued under an Offering Circular with an earlier date.

Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the
“Conditions”) set forth in the Offering Circular dated [original date]. This Pricing Supplement contains
the final terms of the Notes and must be read in conjunction with the Offering Circular dated [current
date], save in respect of the Conditions which are extracted from the Offering Circular dated [original
date] and are attached hereto.]

[Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the numbering
should remain as set out below, even if “Not Applicable” is indicated for individual paragraphs or
sub-paragraphs. Italics denote directions for completing the Pricing Supplement.]

[If the Notes have a maturity of less than one year from the date of their issue, the minimum denomination
may need to be £100,000 or its equivalent in any other currency.]

1. (i) Issuer: Nan Fung Treasury Limited

(ii) Guarantor: Nan Fung International Holdings Limited

2. (i) Series Number: [ ]

(ii) Tranche Number: [ ]

(iii) Date on which the Notes will be The Notes will be consolidated and form a single
consolidated and form a single Series with [identify earlier Tranches] on [the Issue
Series: Date/the date that is 40 days after the Issue
Date/exchange of the Temporary Global Note for
interests in the Permanent Global Note, as referred to
in paragraph [25] below, which is expected to occur
on or about [date]] [Not Applicable]

3. Specified Currency or Currencies: [ ]

4. Aggregate Nominal Amount: [ ]

(i) Series: [ ]

(ii) Tranche: [ ]

45
5. (i) Issue Price: [ ] per cent. of the Aggregate Nominal Amount
[plus accrued interest from [insert date] (if
applicable)]

[(ii) Net proceeds: [ ]]

[Delete for unlisted issuances.]

[(iii) Private Bank [Not Applicable/To be included if a PB rebate is paid:

Rebate/Commission: In addition, the Issuer and the Guarantor have agreed
with the Joint Lead Managers that the Issuer and the
Guarantor will pay a commission to certain private
banks in connection with the distribution of the Notes
to their clients. This commission will be based on the
principal amount of the Notes so distributed, and may
be deducted from the purchase price for the Notes
payable by such private banks upon settlement.]]

6. (i) Specified Denominations: [ ]

(N.B. Notes must have a minimum denomination of

€100,000 (or equivalent).)

(N.B. Where Bearer multiple denominations above

[€100,000] or equivalent are being used the following
sample wording should be followed:

“[€100,000] and integral multiples of [€1,000] in

excess thereof up to and including [€199,000]. No
Notes in definitive form will be issued with a
denomination above [€199,000].”)

(ii) Calculation Amount: [ ]

(If there is only one Specified Denomination, insert

the Specified Denomination.

If there is more than one Specified Denomination,

insert the highest common factor. Note: There must be
a common factor in the case of two or more Specified
Denominations.)

7. (i) Issue Date: [ ]

(ii) Interest Commencement Date: [specify/Issue Date/Not Applicable]

(N.B. An Interest Commencement Date will not be

relevant for certain Notes, for example Zero Coupon
Notes.)

46
8. Maturity Date: [Fixed rate — specify date[, subject to adjustment in
accordance with [specify relevant Business Day
Convention]]/Floating rate — Interest Payment Date
falling in or nearest to [specify month]] 2

9. Interest Basis: [[ ] per cent. Fixed Rate]

[[LIBOR/EURIBOR/HIB OR/CNH
HIBOR/SIBOR/SOR] +/-
[ ] per cent. Floating Rate]
[Zero Coupon]
[Index Linked Interest]
[Dual Currency Interest]
[specify other]
(further particulars specified below)

10. Redemption/Payment Basis: [Redemption at par]

[Index Linked Redemption]
[Dual Currency Redemption]
[Partly Paid]
[Instalment]
[specify other]

11. Change of Interest Basis or [Specify details of any provision for change of Notes
Redemption/Payment Basis: into another Interest Basis or Redemption/Payment
Basis]

12. Put/Call Options: [Investor Put]

[Issuer Call]
[(further particulars specified below)]
[Not Applicable]

13. Date of [Board] approval for issuance [ ] [and [ ], respectively]

of Notes and Guarantee obtained: (N.B. Only relevant where Board (or similar)
authorisation is required for the particular tranche of
Notes or related Guarantee)

14. Listing: [Singapore/specify other/None]

15. Method of distribution: [Syndicated/Non-syndicated]

2
Note that for Renminbi and Hong Kong dollar denominated Fixed Rate Notes where the Interest Payment Dates are subject to
modification it will be necessary to use the second option here.

47
PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE

16. Fixed Rate Note Provisions: [Applicable/Not Applicable]

(If not applicable, delete the remaining
subparagraphs of this paragraph)

(i) Rate[(s)] of Interest: [ ] per cent. per annum [payable

[annually/semi-annually/quarterly/other (specify)] in
arrear]

(If payable other than annually, consider amending

Condition 5)

(ii) Interest Payment Date(s): [[ ] in each year up to and including the

Maturity Date]/[specify other] 3 [, subject to
adjustment in accordance with [specify relevant
Business Day Convention]]

(N.B.: This will need to be amended in the case of

long or short coupons)

(iii) Fixed Coupon Amount(s) for [ ]] per Calculation Amount 4

Notes in definitive form (and in
relation to Notes in global form
see Conditions):

(iv) Broken Amount(s) for Notes in [ ] per Calculation Amount, payable on the
definitive form (and in relation Interest Payment Date falling [in/on] [ ]
to Notes in global form see
Conditions):

(v) Day Count Fraction: [30/360 or Actual/Actual (ICMA) or Actual/365

(Fixed) 5 or [specify other]]

3
Note that for certain Hong Kong dollar denominated Fixed Rate Notes and Renminbi denominated Fixed Rate Notes, the
Interest Payment Dates are subject to modification and the following words should be added: “provided that if any Interest
Payment Date falls on a day which is not a Business Day, the Interest Payment Date will be the next succeeding Business Day
unless it would thereby fall in the next calendar month in which event the Interest Payment Date shall be brought forward to
the immediately preceding Business Day. For these purposes, “Business Day” means a day, other than a Saturday or a Sunday
on which commercial banks and foreign exchange markets settle payments and are open for general business (including
dealing in foreign exchange and currency deposits) in Hong Kong and [●].”

4
For Renminbi or Hong Kong dollar denominated Fixed Rate Notes where the Interest Payment Dates are subject to
modification the following alternative wording is appropriate: “Each Fixed Coupon Amount shall be calculated by
multiplying the product of the Rate of Interest and the Calculation Amount by the Day Count Fraction and rounding the
resultant figure to the nearest CNY0.01, CNY0.005 being rounded upwards in the case of Renminbi denominated Fixed Rate
Notes and to the nearest HK$0.01, HK$0.005 being rounded upwards in the case of Hong Kong dollar denominated Fixed
Rate Notes.”

5
Applicable to Hong Kong dollar denominated Fixed Rate Notes and Renminbi denominated Fixed Rate Notes.

48
 (vi) Determination Date(s): [ ] in each year

[Insert regular interest payment dates, ignoring issue

date or maturity date in the case of a long or short
first or last coupon]

(N.B.: This will need to be amended in the case of

regular interest payment dates which are not of equal
duration)

(N.B.: Only relevant where Day Count Fraction is

Actual/Actual (ICMA))

(vii) Other terms relating to the [None/Give details]

method of calculating interest
for Fixed Rate Notes:

17. Floating Rate Note Provisions: [Applicable/Not Applicable]

(If not applicable, delete the remaining

sub-paragraphs of this paragraph)

(i) Specified Period(s)/Specified [ ][, subject to adjustment in accordance with

Interest Payment Dates: the Business Day Convention set out in (ii) below/,
not subject to any adjustment, as the Business Day
Convention in (ii) below is specified to be Not
Applicable]

(ii) Business Day Convention: Floating Rate Convention/Following Business Day

Convention/Modified Following Business Day
Convention/Preceding Business Day Convention/
[specify other]]

(iii) Additional Business Centre(s): [ ]

(iv) Manner in which the Rate of [Screen Rate Determination/ISDA Determination/

Interest and Interest Amount is specify other]
to be determined:

(v) Party responsible for [ ]

calculating the Rate of Interest
and Interest Amount (if not the
Principal Paying Agent):

(vi) Screen Rate Determination:

— Reference Rate: [ ]

(Either LIBOR, EURIBOR, HIBOR, CNH HIBOR,

SIBOR, SOR or other, although additional
information is required if other — including fallback
provisions in the Agency Agreement)

49
 — Interest Determination [ ]
Date(s):
(Second London business day prior to the start of
each Interest Period if LIBOR (other than Sterling,
Hong Kong dollar or euro LIBOR), first day of each
Interest Period if Sterling LIBOR or Hong Kong
dollar LIBOR or HIBOR, the second day on which the
TARGET2 System is open prior to the start of each
Interest Period if EURIBOR or euro LIBOR, the
second business day prior to the start of each Interest
Period if SIBOR or SOR and the second Hong Kong
business day prior to the start of each Interest Period
if CNH HIBOR)

— Relevant Screen Page: [ ]

(In the case of EURIBOR, if not Reuters EURIBOR01

ensure it is a page which shows a composite rate or
amend the fallback provisions appropriately)
(vii) ISDA Determination:

— Floating Rate Option: [ ]

— Designated Maturity: [ ]

— Reset Date: [ ]

(viii) Margin(s): [+/-] [ ] per cent. per annum

(ix) Minimum Rate of Interest: [ ] per cent. per annum

(x) Maximum Rate of Interest: [ ] per cent. per annum

(xi) Day Count Fraction: [Actual/Actual or Actual/Actual (ISDA)

Actual/365(Fixed)
Actual/365(Sterling) Actual/360
30/360, 360/360 or Bond Basis
30E/360 or Eurobond Basis
30E/360 (ISDA) Other]
(See Condition 5 for alternatives)

(xii) Fallback provisions, rounding [ ]

provisions and any other terms
relating to the method of
calculating interest on Floating
Rate Notes, if different from
those set out in the Conditions:

50
18. Zero Coupon Note Provisions: [Applicable/Not Applicable]

(If not applicable, delete the remaining

sub-paragraphs of this paragraph)

(i) Accrual Yield: [ ] per cent. per annum

(ii) Reference Price: [ ]

(iii) Any other formula/basis of [ ]

determining amount payable:

(iv) Day Count Fraction in relation [30/360]

to Early Redemption Amounts: [Actual/360]
[Actual/365]

19. Index Linked Interest Note Provisions: [Applicable/Not Applicable]

(If not applicable, delete the remaining

sub-paragraphs of this paragraph)

(i) Index/Formula: [give or annex details]

(ii) Calculation Agent: [ ]

(iii) Party responsible for [ ]
calculating the Rate of Interest
(if not the Calculation Agent)
and Interest Amount (if not the
Principal Paying Agent):

(iv) Provisions for determining [need to include a description of market disruption or

Coupon where calculation by settlement disruption events and adjustment
reference to Index and/or provisions]
Formula is impossible or
impracticable:

(v) Specified Period(s)/Specified [ ]

Interest Payment Dates:

(vi) Business Day Convention: [Floating Rate Convention/Following Business Day

Convention/Modified Following Business Day
Convention/Preceding Business Day Convention/
specify other]

(vii) Additional Business Centre(s): [ ]

(viii) Minimum Rate of Interest: [ ] per cent. per annum

(ix) Maximum Rate of Interest: [ ] per cent. per annum

(x) Day Count Fraction: [ ]

51
20. Dual Currency Interest Note Provisions: [Applicable/Not Applicable]

(If not applicable, delete the remaining

sub-paragraphs of this paragraph)

(i) Rate of Exchange/method of [give or annex details]

calculating Rate of Exchange:

(ii) Party, if any, responsible for [ ]

calculating the principal and/or
interest due (if not the Principal
Paying Agent):

(iii) Provisions applicable where [need to include a description of market disruption or

calculation by reference to Rate settlement disruption events and adjustment
of Exchange impossible or provisions]
impracticable:

(iv) Person at whose option [ ]

Specified Currency(ies) is/are
payable:

PROVISIONS RELATING TO REDEMPTION

21. Issuer Call: [Applicable/Not Applicable]

(If not applicable, delete the remaining

subparagraphs of this paragraph)

(i) Optional Redemption Date(s): [ ]

(ii) Optional Redemption Amount [[ ] per Calculation Amount/specify other/see

and method, if any, of Appendix]
calculation of such amount(s):

(iii) If redeemable in part:

(a) Minimum Redemption [ ]

Amount:

(b) Maximum Redemption [ ]

Amount:

(iv) Notice period (if other than as [ ]

set out in the Conditions):
(N.B. If setting notice periods which are different to
those provided in the Conditions, the Issuer is advised
to consider the practicalities of distribution of
information through intermediaries, for example,
clearing systems and custodians, as well as any other
notice requirements which may apply, for example, as
between the Issuer and the Principal Paying Agent or
the Trustee.)

52
22. Investor Put: [Applicable/Not Applicable]

(If not applicable, delete the remaining

sub-paragraphs of this paragraph)

(i) Optional Redemption Date(s): [ ]

(ii) Optional Redemption Amount [[ ] per Calculation Amount/specify other/see

and method, if any, of Appendix]
calculation of such amount(s):

(iii) Notice period (if other than as [ ]

set out in the Conditions):
(N.B. If setting notice periods which are different to
those provided in the Conditions, the Issuer is advised
to consider the practicalities of distribution of
information through intermediaries, for example,
clearing systems and custodians, as well as any other
notice requirements which may apply, for example, as
between the Issuer and the Principal Paying Agent or
the Trustee.)

23. Final Redemption Amount: [[ ] per Calculation Amount/specify other/see

Appendix]]

24. Early Redemption Amount payable on [[ ] per Calculation Amount/specify other/see

redemption for taxation reasons or on Appendix]]
event of default and/or the method of
calculating the same (if required or if
different from that set out in
Condition 7.6):

53
GENERAL PROVISIONS APPLICABLE TO THE NOTES

25. Form of Notes: [Bearer Notes:

[Temporary Bearer Global Note exchangeable for a

Permanent Bearer Global Note which is exchangeable
for Definitive Notes [on 60 days’ notice given at any
time/only upon an Exchange Event]*]

[Temporary Bearer Global Note exchangeable for

Definitive Notes on and after the Exchange Date]

[Permanent Bearer Global Note exchangeable for

Definitive Notes [on 60 days’ notice given at any
time/only upon an Exchange Event]*]

*(Ensure that this is consistent with the wording in

the “Form of the Notes” section in the Offering
Circular and the Notes themselves. N.B. The exchange
upon notice/at any time options should not be
expressed to be applicable if the Specified
Denomination of the Notes in paragraph 6 includes
language substantially to the following effect:
“[€100,000] and integral multiples of [€1,000] in
excess thereof up to and including [€199,000].”
Furthermore, such Specified Denomination
construction is not permitted in relation to any issue
of Notes which is to be represented on issue by a
Temporary Bearer Global Note exchangeable for
Definitive Notes.)

[Registered Notes:

[Registered Global Note ([US$[ ]] nominal

amount) [registered in the name of a nominee for a
common depositary for Euroclear and Clearstream,
Luxembourg/ registered in the name of the HKMA as
operator of the CMU]]

26. Additional Financial Centre(s) or other [Not Applicable/give details]

special provisions relating to
Payment Dates: (Note that this paragraph relates to the place of
payment and not Interest Period end dates to which
sub-paragraphs 17 (iii) and 19(vii) relate)

27. Talons for future Coupons or Receipts [Yes/No. If yes, give details]
to be attached to Definitive Bearer
Notes (and dates on which such
Talons mature):

28. Details relating to Partly Paid Notes: [Not Applicable/give details. N.B.: a new form of
amount of each payment comprising Temporary Bearer Global Note and/or Permanent
the Issue Price and date on which Bearer Global Note may be required for Partly Paid
each payment is to be made and issues.]
consequences of failure to pay,
including any right of the Issuer to
forfeit the Notes and interest due on
late payment:

54
29. Details relating to Instalment Notes:

(i) Instalment Amount(s): [Not Applicable/give details]

(ii) Instalment Date(s): [Not Applicable/give details]

30. Redenomination applicable: Redenomination [not] applicable

[(If Redenomination is applicable, specify the

applicable Day Count Fraction and any provisions
necessary to deal with floating rate interest
calculation (including alternative reference rates)]

31. Other terms or special conditions: [Not Applicable/give details]

GENERAL PROVISIONS APPLICABLE TO THE NOTES

32. (i) If syndicated, names and [Not Applicable/give names and addresses and
addresses of Managers and commitments]
commitments:

(ii) Date of Subscription [ ]

Agreement:

(iii) Stabilisation Manager(s) (if [Not Applicable/give name]

any):

33. If non-syndicated, name of relevant [Not Applicable/give name and address]

Dealer:

34. Total commission and concession: [ ] per cent. of the Aggregate Nominal Amount

35. U.S. selling restrictions: [Reg. S Category 1/Category 2; TEFRA D/TEFRA

C/TEFRA not applicable]

36. Additional selling restrictions: [Not Applicable/give details]

OPERATIONAL INFORMATION

37. Any clearing system(s) other than [CMU/Not Applicable/give name(s) and number(s)]
Euroclear or Clearstream,
Luxembourg and the relevant
identification number(s):

38. Delivery: Delivery [against/free of] payment

39. Additional Paying Agent(s) (if any): [ ]

40. ISIN: [ ]

Common Code: [ ]

41. Legal Entity Identifier (LEI): 254900S3BMA32ATT9Q05

(insert here any other relevant codes such as a CMU instrument number)

55
GENERAL

42. The aggregate principal amount of the [Not Applicable/US$[ ]

Notes has been translated into U.S.
dollars at the rate of [ ],
producing an amount of (for Notes
not denominated in U.S. dollars):

43. Alternative use of proceeds: [Not Applicable/(specify other)]

(to be specified if different from the use of proceeds

set out in the Offering Circular)

[LISTING APPLICATION

This Pricing Supplement comprises the final terms required for the issue of Notes described herein
pursuant to the US$3,000,000,000 Medium Term Note Programme of Nan Fung Treasury Limited.]

[STABILISATION

In connection with the issue of the Notes, one or more of the Managers named as Stabilisation Manager
(or persons acting on their behalf) in this Pricing Supplement may over-allot Notes or effect transactions
with a view to supporting the market price of the Notes at a level higher than that which might otherwise
prevail. However, stabilisation may not necessarily occur. Any stabilisation action may begin on or after
the date on which adequate public disclosure of the terms of the Notes is made and, if begun, may cease
at any time and must be brought to an end no later than the earlier of 30 days after the Issue Date of the
Notes and 60 days after the date of the allotment of the Notes. Any stabilisation action or overallotment
must be conducted in accordance with all applicable laws, regulations and rules.]

RESPONSIBILITY

The Issuer and the Guarantor accept responsibility for the information contained in this Pricing
Supplement.

Signed on behalf of the Issuer: Signed on behalf of the Guarantor:

By: By:
Duly authorised Duly authorised

56
 TERMS AND CONDITIONS OF THE NOTES

The following are the Terms and Conditions of the Notes which will be incorporated by reference into
each Global Note (as defined below) and each definitive Note, in the latter case only if permitted by the
relevant stock exchange or other relevant authority (if any) and agreed by the Issuer, the Guarantor and
the relevant Dealer at the time of issue but, if not so permitted and agreed, such definitive Note will have
endorsed thereon or attached thereto such Terms and Conditions. The applicable Pricing Supplement in
relation to any Tranche of Notes may specify other terms and conditions which shall, to the extent so
specified or to the extent inconsistent with the following Terms and Conditions, replace or modify the
following Terms and Conditions for the purpose of such Notes. The applicable Pricing Supplement (or the
relevant provisions thereof) will be endorsed upon, or attached to, each Global Note and definitive Note.
Reference should be made to “Form of Pricing Supplement” for a description of the content of the Pricing
Supplement which will specify which of such terms are to apply in relation to the relevant Notes.

This Note is one of a Series (as defined below) of Notes issued by Nan Fung Treasury Limited (the
“Issuer”) constituted by a Trust Deed (such Trust Deed as modified and/or supplemented and/or restated
from time to time, the “Trust Deed”) dated 14 August 2012 made between the Issuer, Nan Fung
International Holdings Limited (the “Guarantor”) and The Hongkong and Shanghai Banking
Corporation Limited (the “Trustee”, which expression shall include any successor as trustee or trustees
under the Trust Deed).

References herein to the “Notes” shall be references to the Notes of this Series and shall mean:

(a) in relation to any Notes represented by a global Note (a “Global Note”), units of each
Specified Denomination in the Specified Currency;

(b) any Global Note in bearer form (each a “Bearer Global Note”);

(c) any Global Note in registered form (each a “Registered Global Note”);

(d) any definitive Note in bearer form (“Definitive Bearer Notes” and, together with the Bearer
Global Notes, the “Bearer Notes”) issued in exchange for a Bearer Global Note; and

(e) any definitive Note in registered form (“Definitive Registered Notes” and, together with the
Registered Global Notes, the “Registered Notes”) (whether or not issued in exchange for a
Registered Global Note).

The Notes, the Receipts (as defined below) and the Coupons (as defined below) have the benefit of an
Agency Agreement (such Agency Agreement as amended and/or supplemented and/or restated from time
to time, the “Agency Agreement”) dated 14 August 2012 and made between the Issuer, the Guarantor, the
Trustee, The Hongkong and Shanghai Banking Corporation Limited as issuing and principal paying agent
(the “Principal Paying Agent”, which expression shall include any successor issuing and principal
paying agent under the Agency Agreement), The Hongkong and Shanghai Banking Corporation Limited
as CMU lodging agent (the “CMU Lodging Agent”, which expression shall include any successor CMU
lodging agent), the other paying agents named therein (together with the Principal Paying Agent and the
CMU Lodging Agent, the “Paying Agents”, which expression shall include any additional or successor
paying agents) and The Hongkong and Shanghai Banking Corporation Limited as registrar (the
“Registrar”, which expression shall include any successor registrar) and as transfer agent (together with
the Registrar and the other transfer agents named therein, the “Transfer Agents”, which expression shall
include any additional or successor transfer agents). For the purposes of these Terms and Conditions
(“Conditions”), all references (other than in relation to the determination of interest and other amounts
payable in respect of the Notes) to the Principal Paying Agent shall, with respect to a Series of Notes to
be held in the CMU (as defined below), be deemed to be a reference to the CMU Lodging Agent and all
such references shall be construed accordingly.

57
Interest bearing Definitive Bearer Notes have interest coupons (“Coupons”) and, if indicated in the
applicable Pricing Supplement, talons for further Coupons (“Talons”) attached on issue. Any reference
herein to Coupons or coupons shall, unless the context otherwise requires, be deemed to include a
reference to Talons or talons. Definitive Bearer Notes repayable in instalments have receipts (“Receipts”)
for the payment of the Instalment Amounts (other than the final Instalment Amount) attached on issue.
Definitive Registered Notes and Global Notes do not have Receipts, Coupons or Talons attached on issue.

The final terms for this Note (or the relevant provisions thereof) are set out in the Pricing Supplement
attached to or endorsed on this Note which supplements the Conditions and may specify other terms and
conditions which shall, to the extent so specified or to the extent inconsistent with the Conditions, replace
or modify the Conditions for the purposes of this Note. References to the applicable Pricing
Supplement are to the Pricing Supplement (or the relevant provisions thereof) attached to or endorsed on
this Note.

The Trustee acts for the benefit of the holders for the time being of the Notes (the “Noteholders”, which
expression shall mean (in the case of Bearer Notes) the holders of the Notes and (in the case of Registered
Notes) the persons in whose name the Notes are registered and shall, in relation to any Notes represented
by a Global Note, be construed as provided below), the holders of the Receipts (the “Receiptholders”)
and the holders of the Coupons (the “Couponholders”, which expression shall, unless the context
otherwise requires, include the holders of the Talons), in accordance with the provisions of the Trust
Deed.

As used herein, “Tranche” means Notes which are identical in all respects (including as to listing and
admission to trading) and “Series” means a Tranche of Notes together with any further Tranche or
Tranches of Notes which are (a) expressed to be consolidated and form a single series with such Tranche
of Notes and (b) identical in all respects (including as to listing and admission to trading) except for their
respective Issue Dates, Interest Commencement Dates and/or Issue Prices.

Copies of the Trust Deed and the Agency Agreement are available for inspection during normal business
hours at the registered office for the time being of the Trustee, being at the date hereof at Level 30, HSBC
Main Building, 1 Queen’s Road Central, Hong Kong and at the specified office of each of the Principal
Paying Agent, the Registrar, the other Paying Agents, CMU Lodging Agent and Transfer Agents (such
Agents and the Registrar being together referred to as “Agents”). Copies of the applicable Pricing
Supplement are obtainable during normal business hours at the specified office of the Principal Paying
Agent save that, if this Note is an unlisted Note of any Series, the applicable Pricing Supplement will only
be obtainable by a Noteholder holding one or more unlisted Notes and such Noteholder must produce
evidence satisfactory to the Issuer, the Trustee and the relevant Agent as to its holding of such Notes and
identity. The Noteholders, the Receiptholders and the Couponholders are deemed to have notice of, and
are entitled to the benefit of, and are bound by, all the provisions of the Trust Deed and the applicable
Pricing Supplement and are deemed to have notice of all the provisions of the Agency Agreement which
are applicable to them. The statements in the Conditions include summaries of, and are subject to, the
detailed provisions of the Trust Deed and the Agency Agreement.

Words and expressions defined in the Trust Deed, the Agency Agreement or used in the applicable Pricing
Supplement shall have the same meanings where used in the Conditions unless the context otherwise
requires or unless otherwise stated and provided that, in the event of inconsistency between the Trust
Deed and the Agency Agreement, the Trust Deed will prevail and, in the event of inconsistency between
the Trust Deed or the Agency Agreement and the applicable Pricing Supplement, the applicable Pricing
Supplement will prevail.

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1 FORM, DENOMINATION AND TITLE

The Notes are in bearer form or in registered form as specified in the applicable Pricing Supplement
and, in the case of definitive Notes, serially numbered, in the Specified Currency and the Specified
Denomination(s). Notes of one Specified Denomination may not be exchanged for Notes of another
Specified Denomination and Bearer Notes may not be exchanged for Registered Notes and vice
versa.

This Note may be a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note, an Index Linked
Interest Note, a Dual Currency Interest Note or a combination of any of the foregoing, depending
upon the Interest Basis shown in the applicable Pricing Supplement.

This Note may be an Index Linked Redemption Note, an Instalment Note, a Dual Currency
Redemption Note, a Partly Paid Note or a combination of any of the foregoing, depending upon the
Redemption/Payment Basis shown in the applicable Pricing Supplement.

Definitive Bearer Notes are issued with Coupons attached, unless they are Zero Coupon Notes in
which case references to Coupons and Couponholders in the Conditions are not applicable.

Subject as set out below, title to Bearer Notes, Receipts and Coupons will pass by delivery and title
to Registered Notes will pass upon registration of transfers in the register which is kept by the
Registrar in accordance with the provisions of the Trust Deed and the Agency Agreement. The
Issuer, the Guarantor, the Trustee and the Agents will (except as otherwise required by law) deem
and treat the bearer of any Bearer Note, Receipt or Coupon and the registered holder of any
Registered Note as the absolute owner thereof (whether or not overdue and notwithstanding any
notice of ownership or writing thereon or notice of any previous loss or theft thereof) for all
purposes, but, in the case of any Global Note, without prejudice to the provisions set out in the next
succeeding paragraph.

For so long as any of the Notes is represented by a Global Note held on behalf of Euroclear Bank
SA/NV (“Euroclear”) and/or Clearstream Banking S.A. (“Clearstream, Luxembourg”) and/or the
Hong Kong Monetary Authority (“HKMA”) as operator of the Central Moneymarkets Unit Service
(the CMU), each person (other than Euroclear, Clearstream, Luxembourg or the CMU) who is for
the time being shown in the records of Euroclear, Clearstream, Luxembourg or the CMU as the
holder of a particular nominal amount of such Notes (in which regard any certificate or other
document issued by Euroclear, Clearstream, Luxembourg or the CMU as to the nominal amount of
such Notes standing to the account of any person shall be conclusive and binding for all purposes
save in the case of manifest error) shall be treated by the Issuer, the Guarantor, the Trustee and the
Agents as the holder of such nominal amount of such Notes for all purposes other than with respect
to the payment of principal or interest on such nominal amount of such Notes, for which purpose the
bearer of the relevant Bearer Global Note or the registered holder of the relevant Registered Global
Note shall be treated by the Issuer, the Guarantor, the Trustee and any Agent as the holder of such
nominal amount of such Notes in accordance with and subject to the terms of the relevant Global
Note and the expressions “Noteholder” and “holder of Notes” and related expressions shall be
construed accordingly.

In determining whether a particular person is entitled to a particular nominal amount of Notes as

aforesaid, the Trustee may rely on such evidence and/or information and/or certification as it shall,
in its absolute discretion, think fit and, if it does so rely, such evidence and/or information and/or
certification shall, in the absence of manifest error, be conclusive and binding on all concerned.

Notwithstanding the above, if a Note (whether in global or definitive form) is held through the
CMU, any payment that is made in respect of such Note shall be made at the direction of the bearer
or the registered holder to the person(s) for whose account(s) interests in such Note are credited as
being held through the CMU in accordance the CMU Rules (as defined in the Agency Agreement) at
the relevant time as notified to the CMU Lodging Agent by the CMU in a relevant CMU Instrument

59
 Position Report (as defined in the Agency Agreement) or any other relevant notification by the CMU
(which notification, in either case, shall be conclusive evidence of the records of the CMU as to the
identity of any accountholder and the principal amount of any Note credited to its account, save in
the case of manifest error) (“CMU Accountholders”) and such payments shall discharge the
obligation of the Issuer in respect of that payment under such Note.

Notes which are represented by a Global Note will be transferable only in accordance with the rules
and procedures for the time being of Euroclear, Clearstream, Luxembourg and/or the CMU, as the
case may be.

References to Euroclear and/or Clearstream, Luxembourg and/or the CMU shall, whenever the
context so permits, be deemed to include a reference to any additional or alternative clearing system
specified in the applicable Pricing Supplement or as may otherwise be approved by the Issuer, the
Guarantor, the Principal Paying Agent and the Trustee.

2 TRANSFERS OF REGISTERED NOTES

2.1 Transfers of interests in Registered Global Notes

Transfers of beneficial interests in Registered Global Notes will be effected by Euroclear,

Clearstream, Luxembourg or the CMU, as the case may be, and, in turn, by other participants and, if
appropriate, indirect participants in such clearing systems acting on behalf of beneficial transferors
and transferees of such interests. A beneficial interest in a Registered Global Note will, subject to
compliance with all applicable legal and regulatory restrictions, be transferable for Definitive
Registered Notes only in the authorised denominations set out in the applicable Pricing Supplement
and only in accordance with the rules and operating procedures for the time being of Euroclear,
Clearstream, Luxembourg or the CMU, as the case may be, and in accordance with the terms and
conditions specified in the Trust Deed and the Agency Agreement. Transfers of a Registered Global
Note registered in the name of a nominee for Euroclear, Clearstream, Luxembourg or the CMU shall
be limited to transfers of such Registered Global Note, in whole but not in part, to another nominee
of Euroclear, Clearstream, Luxembourg or the CMU or to a successor of Euroclear, Clearstream,
Luxembourg or the CMU or such successor’s nominee.

2.2 Transfers of Definitive Registered Notes

Subject as provided in Condition 2.5 and Condition 2.6 below, upon the terms and subject to the
conditions set forth in the Trust Deed and the Agency Agreement, a Definitive Registered Note may
be transferred in whole or in part (in the authorised denominations set out in the applicable Pricing
Supplement as Specified Denominations). In order to effect any such transfer (a) the holder or
holders must (i) surrender the Definitive Registered Note for registration of the transfer of the
Definitive Registered Note (or the relevant part of the Definitive Registered Note) at the specified
office of the Registrar or any Transfer Agent, with the form of transfer thereon duly executed by the
holder or holders thereof or his or their attorney or attorneys duly authorised in writing and (ii)
complete and deposit such other certifications as may be required by the Registrar or, as the case
may be, the relevant Transfer Agent and (b) the Registrar or, as the case may be, the relevant
Transfer Agent must, after due and careful enquiry, be satisfied with the documents of title and the
identity of the person making the request. Any such transfer will be subject to the regulations set out
in Schedule 5 to the Agency Agreement, which may be changed by the Issuer and the Guarantor with
the prior written approval of the Registrar and the Trustee. Subject as provided above, the Registrar
or, as the case may be, the relevant Transfer Agent will, within five business days (being for this
purpose a day on which banks are open for business in the city where the specified office of the
Registrar or, as the case may be, the relevant Transfer Agent is located) of the request (or such
longer period as may be required to comply with any applicable fiscal or other laws or regulations),
authenticate and deliver, or procure the authentication and delivery of, at its specified office to the
transferee or (at the risk of the transferee) send by uninsured mail, to such address as the transferee
may request, a new Definitive Registered Note in definitive form of a like aggregate nominal amount
to the Definitive Registered Note (or the relevant part of the Definitive Registered Note) transferred.

60
 In the case of the transfer of part only of a Definitive Registered Note, a new Definitive Registered
Note in respect of the balance of the Definitive Registered Note not transferred will be so
authenticated and delivered or (at the risk of the transferor) sent by uninsured mail to the transferor.

2.3 Registration of transfer upon partial redemption

In the event of a partial redemption of Notes under Condition 7, the Issuer shall not be required to
register the transfer of any Definitive Registered Note, or part of a Definitive Registered Note,
called for partial redemption.

2.4 Costs of registration

Noteholders will not be required to bear the costs and expenses of effecting any registration of
transfer as provided above, except for any costs or expenses of delivery other than by regular
uninsured mail and except that the Issuer may require the payment of a sum sufficient to cover any
stamp duty, tax or other governmental charge that may be imposed in relation to the registration.

2.5 Closed Periods

No Noteholder may require the transfer of a Definitive Registered Note to be registered (i) during
the period of 15 days ending on the due date for redemption of, or payment of any Instalment
Amount or interest in respect of, that Note and (ii) during the period of seven days ending on (and
including) any Record Date (as defined in Condition 6.4).

2.6 Exchanges and transfers of Definitive Registered Notes generally

Holders of Definitive Registered Notes may exchange such Notes for interests in a Registered
Global Note of the same type at any time.

3 STATUS OF THE NOTES AND THE GUARANTEE

3.1 Status of the Notes

The Notes and any relative Receipts and Coupons constitute direct, unconditional, unsubordinated
and (subject to the provisions of Condition 4) unsecured obligations of the Issuer and (subject as
stated above) rank and will at all times rank pari passu without any preference among themselves
and with all other outstanding unsecured and unsubordinated obligations of the Issuer, present and
future, but, in the event of insolvency, only to the extent permitted by applicable laws relating to
creditors’ rights.

3.2 Status of the Guarantee

The Guarantor has in the Trust Deed unconditionally and irrevocably guaranteed the payment of all
sums from time to time payable by the Issuer in respect of the Notes. This guarantee (the
“Guarantee”) constitutes direct, unconditional, unsubordinated and (subject to the provisions of
Condition 4) unsecured obligations of the Guarantor and (subject as stated above) ranks and will at
all times rank pari passu with all other outstanding unsecured and unsubordinated obligations of the
Guarantor, present and future, but, in the event of insolvency, only to the extent permitted by
applicable laws relating to creditors’ rights.

4 NEGATIVE PLEDGE

4.1 Negative Pledge

So long as any of the Notes remains outstanding (as defined in the Trust Deed), neither the Issuer nor
the Guarantor will, and the Guarantor will procure that none of its Principal Subsidiaries (as defined
below) will, create or permit to be outstanding, any mortgage, charge, lien, pledge or other security

61
 interest (each a “Security Interest”) (excluding any Permitted Security Interest (as defined below))
upon, or with respect to, any of its present or future business, undertaking, properties, assets or
revenues (including any uncalled capital) to secure any Relevant Indebtedness (as defined below),
unless the Issuer or the Guarantor (as the case may be), in the case of the creation of a Security
Interest, before or at the same time and, in any other case, promptly, takes any and all action
necessary to ensure that:

(a) all amounts payable by it under (in the case of the Issuer) the Notes, the Receipts, the Coupons
and the Trust Deed and (in the case of the Guarantor) the Guarantee are secured by the Security
Interest equally and rateably with the Relevant Indebtedness to the satisfaction of the Trustee;
or

(b) such other Security Interest or other arrangement (whether or not it includes the giving of a
Security Interest) is provided either (A) as the Trustee shall in its absolute discretion deem not
materially less beneficial to the interests of the Noteholders or (B) as is approved by an
Extraordinary Resolution (which is defined in the Trust Deed as (a) a resolution duly passed by
a majority of not less than three-fourths of the votes cast thereon; or (b) a resolution in writing
signed by or on behalf of the holders of not less than three-fourth in principal amount of the
Notes outstanding) of the Noteholders.

4.2 Interpretation

For the purposes of these Conditions:

(a) “Permitted Security Interest” means (i) any Security Interest over any assets (or related
documents of title) purchased by the Issuer, the Guarantor or any Principal Subsidiary as
security for all or part of the purchase price of such assets and any substitute Security Interest
created on those assets in connection with the refinancing (together with interest, fees and
other charges attributable to such refinancing) of the indebtedness secured on those assets; and
(ii) any existing Security Interest over any assets (or related documents of title) purchased by
the Issuer, the Guarantor or any Principal Subsidiary subject to such Security Interest and any
substitute Security Interest created on those assets in connection with the refinancing (together
with interest, fees and other charges attributable to such refinancing) of the indebtedness
secured on those assets.

(b) “Principal Subsidiary” means any Subsidiary of the Guarantor:

(i) whose net assets or (in the case of a Subsidiary of the Guarantor which has one or more
Subsidiaries) consolidated net assets attributable to the Guarantor represent 5 per cent. or
more of the consolidated net assets (after deducting minority interests in Subsidiaries) of
the Guarantor and its Subsidiaries, as calculated by reference to the then latest audited
accounts (consolidated or, as the case may be, unconsolidated) of such Subsidiary and the
then latest audited consolidated accounts of the Guarantor and its Subsidiaries, provided
that:

(A) in the case of a corporation or other business entity becoming a Subsidiary after the
end of the financial period to which the latest consolidated audited accounts of the
Guarantor relate, the reference to the then latest consolidated audited accounts of
the Guarantor and its Subsidiaries for the purposes of the calculation above shall,
until consolidated audited accounts of the Guarantor for the financial period in
which the relevant corporation or other business entity becomes a Subsidiary are
published, be deemed to be a reference to the then latest consolidated audited
accounts of the Guarantor and its Subsidiaries adjusted to consolidate the latest
audited accounts (consolidated in the case of a Subsidiary which itself has
Subsidiaries) of such Subsidiary in such accounts;

62
 (B) if at any relevant time in relation to the Guarantor or any Subsidiary which itself has
Subsidiaries no consolidated accounts are prepared and audited, the determination
of whether or not a Subsidiary is a Principal Subsidiary shall be made on the basis of
pro forma consolidated accounts prepared for this purpose by the Guarantor;

(C) if at any relevant time in relation to any Subsidiary, no accounts are audited, the
determination of whether or not a Subsidiary is a Principal Subsidiary shall be made
on the basis of pro forma consolidated accounts of the relevant Subsidiary prepared
for this purpose by the Guarantor; and

(D) if the accounts of any Subsidiary (not being a Subsidiary referred to in proviso (A)
above) are not consolidated with those of the Guarantor, then the determination of
whether or not such Subsidiary is a Principal Subsidiary shall be based on a pro
forma consolidation of its accounts (consolidated, if appropriate) with the
consolidated accounts (determined on the basis of the foregoing) of the Guarantor;
or

(ii) to which is transferred the whole or substantially the whole of the assets and undertaking
of a Subsidiary which immediately prior to such transfer was a Principal Subsidiary,
provided that (x) the Principal Subsidiary which so transfers its assets shall forthwith
upon such transfer cease to be a Principal Subsidiary (but without prejudice to
subparagraph (i) above) and (y) the Subsidiary to which the assets are so transferred shall
cease to be a Principal Subsidiary on the date on which the consolidated accounts of the
Guarantor for the financial period current at the date of such transfer have been prepared
and audited but so that such transferor Subsidiary or transferee Subsidiary may be a
Principal Subsidiary on or at any time after the date on which such consolidated accounts
have been prepared and audited by virtue of subparagraph (i) above.

A certificate of two directors of the Guarantor, confirming that in their opinion, a Subsidiary is
or is not, or was or was not, a Principal Subsidiary shall, in the absence of manifest error, be
conclusive and binding on all parties.

(c) “Relevant Indebtedness” means (i) any present or future indebtedness (whether being
principal, premium, interest or other amounts) in the form of, or represented by, any notes,
bonds, debentures, debenture stock, loan stock or other securities which are, or are issued with
the intention on the part of the issuer thereof that they should be, quoted, listed or ordinarily
dealt in or traded on any stock exchange, over-the-counter or other securities market, and (ii)
any guarantee or indemnity of any such indebtedness.

(d) “Subsidiary” means, in relation to the Issuer or the Guarantor, any company (i) in which the
Issuer or as the case may be, the Guarantor holds a majority of the voting rights or (ii) of which
the Issuer or, as the case may be, the Guarantor is a member and has the right to appoint or
remove a majority of the board of directors or (iii) of which the Issuer or as the case may be, the
Guarantor is a member and controls a majority of the voting rights, and includes any company
which is a Subsidiary of a Subsidiary of the Issuer or, as the case may be, the Guarantor or (iv)
which at any time has its accounts consolidated with those of the Issuer or, as the case may be,
the Guarantor or which, under the applicable law, regulations or generally accepted accounting
principles of the Issuer or, as the case may be, the Guarantor, should have its accounts
consolidated with those of the Issuer or, as the case may be, the Guarantor.

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5 INTEREST

5.1 Interest on Fixed Rate Notes

Each Fixed Rate Note bears interest from (and including) the Interest Commencement Date at the
rate(s) per annum equal to the Rate(s) of Interest. Interest will be payable in arrear on the Interest
Payment Date(s) in each year up to (and including) the Maturity Date.

If the Notes are in definitive form, except as provided in the applicable Pricing Supplement, the
amount of interest payable on each Interest Payment Date in respect of the Interest Period ending on
(but excluding) such date will amount to the Fixed Coupon Amount. Payments of interest on any
Interest Payment Date will, if so specified in the applicable Pricing Supplement, amount to the
Broken Amount so specified.

As used in the Conditions, “Interest Period” means the period from (and including) an Interest
Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest
Payment Date.

Except in the case of Notes in definitive form where an applicable Fixed Coupon Amount or Broken
Amount is specified in the applicable Pricing Supplement, interest shall be calculated in respect of
any period by applying the Rate of Interest to:

(a) in the case of Fixed Rate Notes which are represented by a Global Note, the aggregate
outstanding nominal amount of the Fixed Rate Notes represented by such Global Note (or, if
they are Partly Paid Notes, the aggregate amount paid up); or

(b) in the case of Fixed Rate Notes in definitive form, the Calculation Amount;

and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the
resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit
being rounded upwards or otherwise in accordance with applicable market convention. Where the
Specified Denomination of a Fixed Rate Note in definitive form is a multiple of the Calculation
Amount, the amount of interest payable in respect of such Fixed Rate Note shall be the product of
the amount (determined in the manner provided above) for the Calculation Amount and the amount
by which the Calculation Amount is multiplied to reach the Specified Denomination without any
further rounding.

For the purposes of these Conditions:

“Day Count Fraction” means, in respect of the calculation of an amount of interest in accordance
with this Condition 5.1:

(a) if “Actual/Actual (ICMA)” is specified in the applicable Pricing Supplement:

(i) in the case of Notes where the number of days in the relevant period from (and including)
the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to
(but excluding) the relevant payment date (the “Accrual Period”) is equal to or shorter
than the Determination Period during which the Accrual Period ends, the number of days
in such Accrual Period divided by the product of (A) the number of days in such
Determination Period and (B) the number of Determination Dates (as specified in the
applicable Pricing Supplement) that would occur in one calendar year; or

64
 (ii) in the case of Notes where the Accrual Period is longer than the Determination Period
during which the Accrual Period ends, the sum of:

(A) the number of days in such Accrual Period falling in the Determination Period in
which the Accrual Period begins divided by the product of (x) the number of days in
such Determination Period and (y) the number of Determination Dates that would
occur in one calendar year; and

(B) the number of days in such Accrual Period falling in the next Determination Period
divided by the product of (x) the number of days in such Determination Period and
(y) the number of Determination Dates that would occur in one calendar year;

(b) if “30/360” is specified in the applicable Pricing Supplement, the number of days in the period
from (and including) the most recent Interest Payment Date (or, if none, the Interest
Commencement Date) to (but excluding) the relevant payment date (such number of days being
calculated on the basis of a year of 360 days with 12 30-day months) divided by 360; and

(c) if “Actual/365 (Fixed)” is specified in the applicable Pricing Supplement, the actual number
of days in the Interest Period divided by 365.

In the Conditions:

“Determination Period” means each period from (and including) a Determination Date to (but
excluding) the next Determination Date (including, where either the Interest Commencement Date
or the final Interest Payment Date is not a Determination Date, the period commencing on the first
Determination Date prior to, and ending on the first Determination Date falling after, such date); and

“sub-unit” means, with respect to any currency other than euro, the lowest amount of such currency
that is available as legal tender in the country of such currency and, with respect to euro, one cent.

5.2 Interest on Floating Rate Notes and Index Linked Interest Notes

(a) Interest Payment Dates

Each Floating Rate Note and Index Linked Interest Note bears interest from (and including) the
Interest Commencement Date and such interest will be payable in arrear on either:

(i) the Specified Interest Payment Date(s) in each year specified in the applicable Pricing
Supplement; or

(ii) if no Specified Interest Payment Date(s) is/are specified in the applicable Pricing
Supplement, each date (each such date, together with each Specified Interest Payment
Date, an “Interest Payment Date”) which falls the number of months or other period
specified as the Specified Period in the applicable Pricing Supplement after the preceding
Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest
Commencement Date.

Such interest will be payable in respect of each Interest Period.

If a Business Day Convention is specified in the applicable Pricing Supplement and (x) if there
is no numerically corresponding day in the calendar month in which an Interest Payment Date
should occur or (y) if any Interest Payment Date would otherwise fall on a day which is not a
Business Day, then, if the Business Day Convention specified is:

(A) in any case where Specified Periods are specified in accordance with Condition 5.2(a)(ii)
above, the Floating Rate Convention, such Interest Payment Date (a) in the case of (x)

65
 above, shall be the last day that is a Business Day in the relevant month or (b) in the case
of (y) above, shall be postponed to the next day which is a Business Day unless it would
thereby fall into the next calendar month, in which event such Interest Payment Date shall
be brought forward to the immediately preceding Business Day. In the case of (a) and (b),
each subsequent Interest Payment Date shall be the last Business Day in the month which
falls in the Specified Period after the preceding applicable Interest Payment Date
occurred; or

(B) the Following Business Day Convention, such Interest Payment Date shall be postponed
to the next day which is a Business Day; or

(C) the Modified Following Business Day Convention, such Interest Payment Date shall be
postponed to the next day which is a Business Day unless it would thereby fall into the
next calendar month, in which event such Interest Payment Date shall be brought forward
to the immediately preceding Business Day; or

(D) the Preceding Business Day Convention, such Interest Payment Date shall be brought
forward to the immediately preceding Business Day.

In these Conditions, “Business Day” means a day which is both:

(i) a day on which commercial banks and foreign exchange markets settle payments and are
open for general business (including dealing in foreign exchange and foreign currency
deposits) in Hong Kong and each Additional Business Centre (other than TARGET2
System (as defined below)) specified in the applicable Pricing Supplement;

(ii) if TARGET2 System is specified as an Additional Business Centre in the applicable

Pricing Supplement, a day on which the Trans-European Automated Real-Time Gross
Settlement Express Transfer (TARGET2) System (the “TARGET2 System”) is open; and

(iii) either (A) in relation to any sum payable in a Specified Currency other than euro and
Renminbi, a day on which commercial banks and foreign exchange markets settle
payments and are open for general business (including dealing in foreign exchange and
foreign currency deposits) in the principal financial centre of the country of the relevant
Specified Currency (if other than Hong Kong and any Additional Business Centre and
which if the Specified Currency is Australian dollars or New Zealand dollars shall be
Sydney and Auckland, respectively), (B) in relation to any sum payable in euro, a day on
which the TARGET2 System is open or (C) in relation to any sum payable in Renminbi, a
day (other than a Saturday, Sunday or public holiday) on which commercial banks in
Hong Kong are generally open for business and settlement of Renminbi payments in
Hong Kong.

(b) Rate of Interest

The Rate of Interest payable from time to time in respect of Floating Rate Notes and Index
Linked Interest Notes will be determined in the manner specified in the applicable Pricing
Supplement.

(i) ISDA Determination for Floating Rate Notes

Where ISDA Determination is specified in the applicable Pricing Supplement as the

manner in which the Rate of Interest is to be determined, the Rate of Interest for each
Interest Period will be the relevant ISDA Rate plus or minus (as indicated in the
applicable Pricing Supplement) the Margin (if any). For the purposes of this
subparagraph (i), “ISDA Rate” for an Interest Period means a rate equal to the Floating
Rate that would be determined by the Principal Paying Agent under an interest rate swap
transaction if the Principal Paying Agent were acting as Calculation Agent for that swap

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 transaction under the terms of an agreement incorporating the 2006 ISDA Definitions, as
published by the International Swaps and Derivatives Association, Inc. and as amended
and updated as at the Issue Date of the first Tranche of the Notes (the “ISDA
Definitions”) and under which:

(A) the Floating Rate Option is as specified in the applicable Pricing Supplement;

(B) the Designated Maturity is a period specified in the applicable Pricing Supplement;
and

(C) the relevant Reset Date is either (a) if the applicable Floating Rate Option is based
on the London interbank offered rate (“LIBOR”), on the Euro-zone interbank
offered rate (“EURIBOR”) or the Hong Kong interbank offered rate (“HIBOR”) or
the CNH Hong Kong interbank offered rate (“CNH HIBOR”), the first day of that
Interest Period or (b) in any other case, as specified in the applicable Pricing
Supplement.

For the purposes of this subparagraph (i), “Floating Rate, Calculation Agent”,
“Floating Rate Option, Designated Maturity” and “Reset Date” have the meanings
given to those terms in the ISDA Definitions.

(ii) Screen Rate Determination for Floating Rate Notes where the Reference Rate is specified
as being LIBOR, EURIBOR or HIBOR

Where Screen Rate Determination is specified in the applicable Pricing Supplement as

the manner in which the Rate of Interest is to be determined, the Rate of Interest for each
Interest Period will, subject as provided below, be either:

(A) the offered quotation; or

(B) the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005
being rounded upwards) of the offered quotations,

(expressed as a percentage rate per annum) for the Reference Rate which appears or
appear, as the case may be, on the Relevant Screen Page as at 11.00 a.m. (London time, in
the case of LIBOR, or Brussels time, in the case of EURIBOR, or Hong Kong time, in the
case of HIBOR) or as at 11.15 a.m. (Hong Kong time, in the case of CNH HIBOR) on the
Interest Determination Date in question plus or minus (as indicated in the applicable
Pricing Supplement) the Margin (if any), all as determined by the Principal Paying Agent.
If five or more of such offered quotations are available on the Relevant Screen Page, the
highest (or, if there is more than one such highest quotation, one only of such quotations)
and the lowest (or, if there is more than one such lowest quotation, one only of such
quotations) shall be disregarded by the Principal Paying Agent for the purpose of
determining the arithmetic mean (rounded as provided above) of such offered quotations.

The Agency Agreement contains provisions for determining the Rate of Interest in the
event that the Relevant Screen Page is not available or if, in the case of (A) above, no such
offered quotation appears or, in the case of (B) above, fewer than three such offered
quotations appear, in each case as at the time specified in the preceding paragraph.

If the Reference Rate from time to time in respect of Floating Rate Notes is specified in
the applicable Pricing Supplement as being other than LIBOR or EURIBOR or HIBOR or
CNH HIBOR, or SIBOR or SOR, the Rate of Interest in respect of such Notes will be
determined as provided in the applicable Pricing Supplement.

67
(iii) Screen Rate Determination for Floating Rate Notes where the Reference Rate is specified
as being the Singapore dollar interbank offer rate (“SIBOR”) or the Singapore dollar
swap offer rate (“SOR”):

(A) Each Floating Rate Note where the Reference Rate is specified as being SIBOR (in
which case such Note will be a “SIBOR Note”) or SOR (in which case such Note
will be a “Swap Rate Note”) bears interest at a floating rate determined by
reference to a benchmark as specified in the applicable Pricing Supplement.

(B) The Rate of Interest payable from time to time in respect of each Floating Rate Note
under this Condition 5.2(b)(iii) will be determined by the Calculation Agent on the
basis of the following provisions:

(i) in the case of Floating Rate Notes which are SIBOR Notes:

(aa) the Calculation Agent will, at or about the relevant time on the relevant
Interest Determination Date in respect of each Interest Period, determine
the Rate of Interest for such Interest Period which shall be the offered rate
for deposits in Singapore dollars for a period equal to the duration of such
Interest Period which appears on the Reuters Screen ABSIRFIX01 page
under the caption “ASSOCIATION OF BANKS IN SINGAPORE —
SIBOR AND SWAP OFFER RATES — RATES AT 11:00 A.M.
SINGAPORE TIME” and the column headed “SGD SIBOR” (or such
other Relevant Screen Page);

(bb) if no such rate appears on the Reuters Screen ABSIRFIX01 page (or such
other replacement page thereof), the Calculation Agent will, at or about
the relevant time on such Interest Determination Date, determine the Rate
of Interest for such Interest Period which shall be the rate which appears
on Page ABSI on the monitor of the Bloomberg agency under the caption
“ASSOCIATION OF BANKS IN SG — SWAP OFFER AND SIBOR
FIXING RATES — RATES AT 11:00AM SINGAPORE TIME” and the
column headed “SGD SIBOR” (or such other replacement page thereof),
being the offered rate for deposits in Singapore dollars for a period equal
to the duration of such Interest Period;

(cc) if no such rate appears on Page ABSI on the monitor of the Bloomberg
agency (or such other replacement page thereof or, if no rate appears, on
such other Relevant Screen Page) or if Page ABSI on the monitor of the
Bloomberg agency (or such other replacement page thereof or such other
Relevant Screen Page) is unavailable for any reason, the Calculation
Agent will request the Reference Banks to provide the Calculation Agent
with the rate at which deposits in Singapore dollars are offered by it at
approximately the relevant time on the Interest Determination Date to
prime banks in the Singapore inter-bank market for a period equivalent to
the duration of such Interest Period commencing such Interest Payment
Date in an amount comparable to the aggregate nominal amount of the
relevant Floating Rate Notes. The Rate of Interest for such Interest Period
shall be the arithmetic mean (rounded up, if necessary, to the nearest 1/16
per cent.) of such offered quotations, as determined by the Calculation
Agent;

68
 (dd) if on any Interest Determination Date two but not all the Reference Banks
provide the Calculation Agent with such quotations, the Rate of Interest
for the relevant Interest Period shall be determined in accordance with
(cc) above on the basis of the quotations of those Reference Banks
providing such quotations; and

(ee) if on any Interest Determination Date one only or none of the Reference
Banks provides the Calculation Agent with such quotations, the Rate of
Interest for the relevant Interest Period shall be the rate per annum which
the Calculation Agent determines to be the arithmetic mean (rounded up,
if necessary, to the nearest 1/16 per cent.) of the rates quoted by the
Reference Banks or those of them (being at least two in number) to the
Calculation Agent at or about the relevant time on such Interest
Determination Date as being their cost (including the cost occasioned by
or attributable to complying with reserves, liquidity, deposit or other
requirements imposed on them by any relevant authority or authorities) of
funding, for the relevant Interest Period, an amount equal to the aggregate
nominal amount of the relevant Floating Rate Notes for such Interest
Period by whatever means they determine to be most appropriate or if on
such Interest Determination Date one only or none of the Reference
Banks provides the Calculation Agent with such quotation, the rate per
annum which the Calculation Agent determines to be arithmetic mean
(rounded up, if necessary to the nearest 1/16 per cent.) of the prime
lending rates for Singapore dollars quoted by the Reference Banks at or
about the relevant time on such Interest Determination Date.

(ii) in the case of Floating Rate Notes which are Swap Rate Notes:

(aa) the Calculation Agent will, at or about the relevant time on the relevant
Interest Determination Date in respect of each Interest Period, determine
the Rate of Interest for such Interest Period which shall be the Average
Swap Rate for such Interest Period (determined by the Calculation Agent
as being the rate which appears on the Reuters Screen ABSIRFIX01 page
under the caption “ASSOCIATION OF BANKS IN SINGAPORE —
SIBOR AND SWAP OFFER RATES — RATES AT 11:00 A.M.
SINGAPORE TIME” under the column headed “SGD SWAP OFFER” (or
such other page as may replace Reuters Screen ABSIRFIX01 page for the
purposes of displaying the swap rates of leading reference banks) at or
about the relevant time on such Interest Determination Date and for a
period equal to the duration of such Interest Period);

69
(bb) if on any Interest Determination Date, no such rate is quoted on Reuters
Screen ABSIRFIX01 page (or such other replacement page as aforesaid)
or Reuters Screen ABSIRFIX01 page (or such other replacement page as
aforesaid) is unavailable for any reason, the Calculation Agent will
determine the Average Swap Rate (which shall be round up to the nearest
1/16 per cent.) for such Interest Period in accordance with the following
formula:

In the case of Premium:

Average Swap Rate = 365 (Premium x 365000)

x SIBOR +
360 (T x Spot Rate)

(SIBOR x Premium) 365

+ x
(Spot Rate) 360

In the case of Discount:

Average Swap Rate = 365 (Discount x 365000)

x SIBOR +
360 (T x Spot Rate)

(SIBOR x Premium) 365

- x
(Spot Rate) 360

Where:

SIBOR = the rate which appears on the Reuters Screen SIBOR

page under the caption “SINGAPORE INTERBANK
OFFER RATES (DOLLAR DEPOSITS) 11 A.M.” and
the row headed “SIBOR USD” (or such other page as
may replace Reuters Screen SIBOR page for the
purpose of displaying Singapore inter-bank U.S. dollar
offered rates of leading reference banks) at or about the
Relevant Time on the relevant Interest Determination
Dates for a period equal to the duration of the Interest
Period concerned;

SPOT = The rate (determined by the Calculation Agent) being

RATE the composite quotation or, in the absence of which, the
arithmetic mean of the rates quoted by the Reference
Banks and which appear under the caption
“ASSOCIATION OF BANKS IN SINGAPORE - SGD
SPOT AND SWAP OFFER RATES AT 11.00 A.M.
SINGAPORE TIME” and the column headed “SPOT”
on the Reuters Screen ABSIRFIX06 page (or such other
page as may replace the Reuters Screen ABSIRFIX06
page for the purpose of displaying the spot rates and
swap points of leading reference banks) at or about the
Relevant Time on the relevant Interest Determination
Date for a period equal to the duration of the Interest
Period concerned;

70
 Premium = the rate (determined by the Calculation Agent) being
or the composite quotation or, in the absence of which, the
Discount swap point (expressed in Singapore dollar per U.S.
dollar) quoted by the Reference Banks for a period
equal to the duration of the Interest Period concerned
which appear under the caption “ASSOCIATION OF
BANKS IN SINGAPORE — SGD SPOT AND SWAP
OFFER RATES AT 11.00 A.M. SINGAPORE TIME” on
the Reuters Screen ABSIRFIX06-7 pages (or such other
page as may replace the Reuters Screen ABSIRFIX06-7
pages for the purpose of displaying the spot rates and
swap points of leading reference banks) at or about the
Relevant Time on the relevant Interest Determination
Date for a period equal to the duration of the Interest
Period concerned; and

T = the number of days in the Interest Period concerned.

The Rate of Interest for such Interest Period shall be the Average Swap
Rate (as determined by the Calculation Agent);

(cc) if on any Interest Determination Date any one of the components for the
purposes of calculating the Average Swap Rate under (bb) above is not
quoted on the relevant Reuters Screen page (or such other replacement
page as aforesaid) or the relevant Reuters Screen page (or such other
replacement page as aforesaid) is unavailable for any reason, the
Calculation Agent will request the principal Singapore offices of the
Reference Banks to provide the Calculation Agent with quotations of
their Swap Rates for the Interest Period concerned at or about the
Relevant Time on that Interest Determination Date and the Rate of
Interest for such Interest Period shall be the Average Swap Rate for such
Interest Period (which shall be the rate per annum equal to the arithmetic
mean (rounded up, if necessary to the nearest 1/16 per cent.) of the Swap
Rates quoted by the Reference Banks to the Calculation Agent). The Swap
Rate of a Reference Bank means the rate at which that Reference Bank
can generate Singapore dollars for the Interest Period concerned in the
Singapore inter-bank market at or about the Relevant Time on the relevant
Interest Determination Date and shall be determined as follows:

71
 In the case of Premium:

Average Swap Rate = 365 (Premium x 365000)

x SIBOR +
360 (T x Spot Rate)

(SIBOR x Premium) 365

+ x
(Spot Rate) 360

In the case of Discount:

Average Swap Rate = 365 (Discount x 365000)

x SIBOR +
360 (T x Spot Rate)

(SIBOR x Premium) 365

- x
(Spot Rate) 360

Where:

SIBOR = the rate per annum at which U.S. dollar deposits for a
period equal to the duration of the Interest Period
concerned are being offered by that Reference Bank to
prime banks in the Singapore inter-bank market at or
about the Relevant Time on the relevant Interest
Determination Date;

SPOT = the rate per annum at which U.S. dollar deposits for a
RATE period equal to the duration of the Interest Period
concerned are being offered by that Reference Bank to
prime banks in the Singapore inter-bank market at or
about the Relevant Time on the relevant Interest
Determination Date;

Premium = the premium that would have been paid by that

Reference Bank in buying U.S. dollars forward in
exchange for Singapore dollars on the last day of the
Interest Period concerned in the Singapore inter-bank
market;

Discount = the discount that would have been received by that

Reference Bank in buying U.S. dollars forward in
exchange for Singapore dollars on the last day of the
Interest Period concerned in the Singapore inter-bank
market; and

T = the number of days in the Interest Period concerned

(dd) if on any Interest Determination Date two but not all of the Reference
Banks provide the Calculation Agent with quotations of their Swap
Rate(s), the Average Swap Rate shall be determined in accordance with
(cc) above on the basis of the quotations of those Reference Banks
providing such quotations; and

(ee) if on any Interest Determination Date one only or none of the Reference
Banks provides the Calculation Agent with quotations of their Swap
Rate(s), the Average Swap Rate shall be determined by the Calculation
Agent to be the rate per annum equal to the arithmetic mean (rounded up,
if necessary, to the nearest 1/16 per cent.) of the rates quoted by the
Reference Banks or those of them (being at least two in number) to the
Calculation Agent at or about the Relevant Time on such Interest

72
 Determination Date as being their cost (including the cost occasioned by
or attributable to complying with reserves, liquidity, deposit or other
requirements imposed on them by any relevant authority or authorities) of
funding, for the relevant Interest Period, in an amount equal to the
aggregate nominal amount of the relevant Floating Rate Notes for such
Interest Period by whatever means they determine to be most appropriate
and the Rate of Interest for the relevant Interest Period shall be the
Average Swap Rate (as so determined by the Calculation Agent), or if on
such Interest Determination Date one only or none of the Reference
Banks provides the Calculation Agent with such quotation, the Rate of
Interest for the relevant Interest Period shall be the rate per annum equal
to the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per
cent.) of the prime lending rates for Singapore dollars quoted by the
Reference Banks at or about the Relevant Time on such Interest
Determination Date.

(C) On the last day of each Interest Period, the Issuer will pay interest on each Floating
Rate Note to which such Interest Period relates at the Rate of Interest for such
Interest Period.

(iv) If the Reference Rate from time to time in respect of Floating Rate Notes is specified in
the applicable Pricing Supplement as being other than LIBOR or EURIBOR or HIBOR or
SIBOR or SOR, the Rate of Interest in respect of such Notes will be determined as
provided in the applicable Pricing Supplement.

In the Conditions:

“Reference Banks” means, in the case of a determination of SIBOR or SOR, the principal
Singapore offices of each of the three major banks in the Singapore interbank market, in each
case selected by the Calculation Agent or as specified in the applicable Pricing Supplement;

“Reference Rate” means the rate specified in the applicable Pricing Supplement; and

“Relevant Screen Page” means such page, section, caption, column or other part of a
particular information service as may be specified in the applicable Pricing Supplement or
such other page, section, caption, column or other part as may replace it on that information
service or such other information service, in each case, as may be nominated by the person
providing or sponsoring the information appearing there for the purpose of displaying rates or
prices comparable to the Reference Rate.

(c) Minimum Rate of Interest and/or Maximum Rate of Interest

If the applicable Pricing Supplement specifies a Minimum Rate of Interest for any Interest
Period, then, in the event that the Rate of Interest in respect of such Interest Period determined
in accordance with the provisions of paragraph (b) above is less than such Minimum Rate of
Interest, the Rate of Interest for such Interest Period shall be such Minimum Rate of Interest.

If the applicable Pricing Supplement specifies a Maximum Rate of Interest for any Interest
Period, then, in the event that the Rate of Interest in respect of such Interest Period determined
in accordance with the provisions of paragraph (b) above is greater than such Maximum Rate
of Interest, the Rate of Interest for such Interest Period shall be such Maximum Rate of
Interest.

Unless otherwise stated in the applicable Pricing Supplement the Minimum Rate of Interest
shall be deemed to be zero.

(d) Determination of Rate of Interest and calculation of Interest Amounts

The Principal Paying Agent, in the case of Floating Rate Notes, for which the Reference Rate
is neither SIBOR nor SOR, and the Calculation Agent, in the case of Index Linked Interest
Notes or Floating Rate Notes for which the Reference Rate is specified as SIBOR or SOR, will,
at or as soon as practicable after each time at which the Rate of Interest is to be determined,

73
determine the Rate of Interest for the relevant Interest Period. In the case of Index Linked
Interest Notes, the Calculation Agent will notify the Principal Paying Agent of the Rate of
Interest for the relevant Interest Period as soon as practicable after calculating the same.

The Principal Paying Agent will (in the case of Floating Rate Notes for which the Reference
Rate is SIBOR or SOR or Index Linked Notes, if the Rate of Interest is notified to the Principal
Paying Agent by the Calculation Agent) calculate the amount of interest (the “Interest
Amount”) payable on the Floating Rate Notes or Index Linked Interest Notes for the relevant
Interest Period by applying the Rate of Interest to:

(i) in the case of Floating Rate Notes or Index Linked Interest Notes which are represented
by a Global Note, the aggregate outstanding nominal amount of the Notes represented by
such Global Note (or, if they are Partly Paid Notes, the aggregate amount paid up); or

(ii) in the case of Floating Rate Notes or Index Linked Interest Notes in definitive form, the
Calculation Amount;

and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding
the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such
sub-unit being rounded upwards or otherwise in accordance with applicable market
convention. Where the Specified Denomination of a Floating Rate Note or an Index Linked
Interest Note in definitive form is a multiple of the Calculation Amount, the Interest Amount
payable in respect of such Note shall be the product of the amount (determined in the manner
provided above) for the Calculation Amount and the amount by which the Calculation Amount
is multiplied to reach the Specified Denomination without any further rounding.

“Day Count Fraction” means, in respect of the calculation of an amount of interest in

accordance with this Condition 5.2:

(i) if “Actual/Actual (ISDA)” or “Actual/Actual” is specified in the applicable Pricing

Supplement, the actual number of days in the Interest Period divided by 365 (or, if any
portion of that Interest Period falls in a leap year, the sum of (A) the actual number of
days in that portion of the Interest Period falling in a leap year divided by 366 and (B) the
actual number of days in that portion of the Interest Period falling in a non-leap year
divided by 365);

(ii) if “Actual/365 (Fixed)” is specified in the applicable Pricing Supplement, the actual
number of days in the Interest Period divided by 365;

(iii) if “Actual/365 (Sterling)” is specified in the applicable Pricing Supplement, the actual
number of days in the Interest Period divided by 365 or, in the case of an Interest Payment
Date falling in a leap year, 366;

(iv) if “Actual/360” is specified in the applicable Pricing Supplement, the actual number of
days in the Interest Period divided by 360;

(v) if “30/360”, “360/360” or Bond Basis is specified in the applicable Pricing Supplement,
the number of days in the Interest Period divided by 360, calculated on a formula basis as
follows:

[360 x (Y2 - Y1)] + [30 x (M2 - M1)] + (D2 - D1)

Day Count Fraction =
360

74
 where:

“Y1” is the year, expressed as a number, in which the first day of the Interest Period falls;

“Y2” is the year, expressed as a number, in which the day immediately following the last
day of the Interest Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of the Interest
Period falls;

“M2” is the calendar month, expressed as a number, in which the day immediately
following the last day of the Interest Period falls;

“D1” is the first calendar day, expressed as a number, of the Interest Period, unless such
number is 31, in which case “D1” will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last day
included in the Interest Period, unless such number would be 31 and “D1” is greater than
29, in which case “D2” will be 30;

(vi) if “30E/360 or “Eurobond Basis” is specified in the applicable Pricing Supplement, the
number of days in the Interest Period divided by 360, calculated on a formula basis as
follows:

[360 x (Y2 - Y1)] + [30 x (M2 - M1)] + (D2 - D1)

Day Count Fraction =
360

where:

“Y1” is the year, expressed as a number, in which the first day of the Interest Period falls;

“Y2” is the year, expressed as a number, in which the day immediately following the last
day of the Interest Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of the Interest
Period falls;

“M2” is the calendar month, expressed as a number, in which the day immediately
following the last day of the Interest Period falls;

“D1” is the first calendar day, expressed as a number, of the Interest Period, unless such
number would be 31, in which case “D1” will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last day
included in the Interest Period, unless such number would be 31, in which case “D2” will
be 30; and

(vii) if “30E/360 (ISDA)” is specified in the applicable Pricing Supplement, the number of
days in the Interest Period divided by 360, calculated on a formula basis as follows:

[360 x (Y2 - Y1)] + [30 x (M2 - M1)] + (D2 - D1)

Day Count Fraction =
360

75
 where:

“Y1” is the year, expressed as a number, in which the first day of the Interest Period falls;

“Y2” is the year, expressed as a number, in which the day immediately following the last
day of the Interest Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of the Interest
Period falls;

“M2” is the calendar month, expressed as a number, in which the day immediately
following the last day of the Interest Period falls;

“D1” is the first calendar day, expressed as a number, of the Interest Period, unless (i) that
day is the last day of February or (ii) such number would be 31, in which case “D1” will
be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last day
included in the Interest Period, unless (i) that day is the last day of February but not the
Maturity Date or (ii) such number would be 31, in which case “D2” will be 30.

(e) Notification of Rate of Interest and Interest Amounts

The Principal Paying Agent will (in the case of Floating Rate Notes for which the Reference
Rate is SIBOR or SOR or Index Linked Interest Notes, if the Rate of Interest is notified to the
Principal Paying Agent by the Calculation Agent) cause the Rate of Interest and each Interest
Amount for each Interest Period and the relevant Interest Payment Date to be notified to the
Issuer, the Trustee and (if required by the Issuer and the contact details of such stock exchange
is notified to the Principal Paying Agent) any stock exchange on which the relevant Floating
Rate Notes or Index Linked Interest Notes are for the time being listed and notice thereof to be
published in accordance with Condition 14 as soon as possible after their determination but in
no event later than the fourth Hong Kong Business Day thereafter. Each Interest Amount and
Interest Payment Date so notified may subsequently be amended (or appropriate alternative
arrangements made by way of adjustment) without prior notice in the event of an extension or
shortening of the Interest Period. Any such amendment will be promptly notified to each stock
exchange on which the relevant Floating Rate Notes or Index Linked Interest Notes are for the
time being listed and to the Noteholders in accordance with Condition 14. For the purposes of
this paragraph, the expression “Hong Kong Business Day” means a day (other than a Saturday
or a Sunday) on which banks and foreign exchange markets are open for general business in
Hong Kong.

(f) Determination or Calculation by Trustee

If for any reason at any relevant time the Principal Paying Agent or, as the case may be, the
Calculation Agent defaults in its obligation to determine the Rate of Interest or the Principal
Paying Agent defaults in its obligation to calculate any Interest Amount in accordance with
subparagraph (b)(i) or subparagraph (b)(ii) above or as otherwise specified in the applicable
Pricing Supplement, as the case may be, and in each case in accordance with paragraph (d)
above, the Trustee shall make such determination or calculation and such determination or
calculation shall be deemed to have been made by the Principal Paying Agent or the
Calculation Agent, as applicable. In doing so, the Trustee shall apply the foregoing provisions
of this Condition, with any necessary consequential amendments, to the extent that, in its
opinion, it can do so, and, in all other respects it shall do so in such manner as it shall deem fair
and reasonable in all the circumstances, but subject always to any Minimum Rate of Interest or
Maximum Rate of Interest specified in the applicable Pricing Supplement.

76
(g) Certificates to be final

All certificates, communications, opinions, determinations, calculations, quotations and

decisions given, expressed, made or obtained for the purposes of the provisions of this
Condition 5.2, whether by the Principal Paying Agent or, if applicable, the Calculation Agent,
or, if applicable, the Trustee, shall (in the absence of fraud, wilful misconduct, gross
negligence or manifest error) be binding on the Issuer, the Guarantor, the Trustee, the Principal
Paying Agent, the Calculation Agent (if applicable), the other Agents and all Noteholders,
Receiptholders and Couponholders and (in the absence of fraud, wilful misconduct, gross
negligence or manifest error) no liability to the Issuer, the Guarantor, the Noteholders, the
Receiptholders or the Couponholders shall attach to the Principal Paying Agent or, if
applicable, the Calculation Agent or the Trustee in connection with the exercise or
non-exercise by it of its powers, duties and discretions pursuant to such provisions.

(h) Benchmark Replacement

In addition, notwithstanding the provisions above in this Condition 5.2, if the Issuer
determines that a Benchmark Event (as defined below) has occurred in relation to the relevant
Reference Rate specified in the applicable Pricing Supplement when any Rate of Interest (or
the relevant component part thereof) remains to be determined by such Reference Rate, then
the following provisions shall apply:

(i) the Issuer shall use all reasonable endeavours to appoint, as soon as reasonably
practicable, an Independent Adviser (as defined below) to determine (acting in a
reasonable manner), no later than five business days prior to the relevant Interest
Determination Date relating to the next succeeding Interest Period (the “IA
Determination Cut-off Date”), a Successor Rate (as defined below) or, alternatively, if
there is no Successor Rate, an Alternative Reference Rate (as defined below) for purposes
of determining the Rate of Interest (or the relevant component part thereof) applicable to
the Notes;

(ii) if the Issuer (acting in a reasonable manner) is unable to appoint an Independent Adviser,
or the Independent Adviser appointed by it fails to determine a Successor Rate or an
Alternative Reference Rate prior to the IA Determination Cut-off Date, the Issuer (acting
in a reasonable manner) may determine a Successor Rate or, if there is no Successor Rate,
an Alternative Reference Rate;

(iii) if a Successor Rate or, failing which, an Alternative Reference Rate (as applicable) is
determined in accordance with the preceding provisions, such Successor Rate or, failing
which, an Alternative Reference Rate (as applicable) shall be the Reference Rate for each
of the future Interest Periods (subject to the subsequent operation of, and to adjustment as
provided in, this Condition 5.2(h)); provided, however, that if sub-paragraph (ii) applies
and the Issuer (acting in a reasonable manner) is unable to or does not determine a
Successor Rate or an Alternative Reference Rate prior to the relevant Interest
Determination Date, the Rate of Interest applicable to the next succeeding Interest Period
shall be equal to the Rate of Interest last determined in relation to the Notes in respect of
the preceding Interest Period (or alternatively, if there has not been a first Interest
Payment Date, the rate of interest shall be the initial Rate of Interest) (subject, where
applicable, to substituting the Margin (as defined below) that applied to such preceding
Interest Period for the Margin that is to be applied to the relevant Interest Period); for the
avoidance of doubt, the proviso in this sub- paragraph (iii) shall apply to the relevant
Interest Period only and any subsequent Interest Periods are subject to the subsequent
operation of, and to adjustment as provided in, this Condition 5.2(h));

77
(iv) if the Independent Adviser or the Issuer (acting in a reasonable manner) determines a
Successor Rate or, failing which, an Alternative Reference Rate (as applicable) in
accordance with the above provisions, the Independent Adviser or the Issuer (acting in
good faith and in a commercially reasonable manner) (as applicable), may also specify
changes to these Conditions, including but not limited to the Day Count Fraction,
Relevant Screen Page, Business Day Convention, business days, Interest Determination
Date and/or the definition of Reference Rate applicable to the Notes, and the method for
determining the fallback rate in relation to the Notes, if such changes are necessary to
ensure the proper operation of such Successor Rate, Alternative Reference Rate and/or
Adjustment Spread (as defined below) (as applicable). If the Independent Adviser (in
consultation with the Issuer) or the Issuer (acting in a reasonable manner) (as applicable),
determines that an Adjustment Spread is required to be applied to the Successor Rate or
the Alternative Reference Rate (as applicable) and determines the quantum of, or a
formula or methodology for determining, such Adjustment Spread, then such Adjustment
Spread shall be applied to the Successor Rate or the Alternative Reference Rate (as
applicable). If the Independent Adviser or the Issuer (acting in a reasonable manner) (as
applicable) is unable to determine the quantum of, or a formula or methodology for
determining, such Adjustment Spread, then such Successor Rate or Alternative Reference
Rate (as applicable) will apply without an Adjustment Spread. For the avoidance of
doubt, the Trustee and the Principal Paying Agent shall, at the direction and expense of
the Issuer, effect such consequential amendments to the Trust Deed, Agency Agreement
and these Conditions as may be required in order to give effect to this Condition 5.2(h).
Noteholder consent shall not be required in connection with effecting the Successor Rate
or Alternative Reference Rate (as applicable) or such other changes, including for the
execution of any documents or other steps by the Trustee or the Principal Paying Agent (if
required); and

(v) the Issuer shall promptly, following the determination of any Successor Rate or
Alternative Reference Rate (as applicable), give notice thereof to the Trustee, the
Principal Paying Agent and the Noteholders, which shall specify the effective date(s) for
such Successor Rate or Alternative Reference Rate (as applicable) and any consequential
changes made to these Conditions,

provided that the determination of any Successor Rate or Alternative Reference Rate, and any
other related changes to the Notes, shall be made in accordance with applicable law.

For the purposes of this Condition 5.2(h):

“Adjustment Spread” means a spread (which may be positive or negative) or formula or

methodology for calculating a spread, which the Independent Adviser (in consultation with the
Issuer) or the Issuer (acting in a reasonable manner) (as applicable), determines is required to
be applied to the Successor Rate or the Alternative Reference Rate (as applicable) in order to
reduce or eliminate, to the extent reasonably practicable in the circumstances, any economic
prejudice or benefit (as applicable) to Noteholders and Couponholders as a result of the
replacement of the Reference Rate with the Successor Rate or the Alternative Reference Rate
(as applicable) and is the spread, formula or methodology which:

(i) in the case of a Successor Rate, is formally recommended in relation to the replacement of
the Reference Rate with the Successor Rate by any Relevant Nominating Body; or

(ii) in the case of a Successor Rate for which no such recommendation has been made or in
the case of an Alternative Reference Rate, the Independent Adviser (in consultation with
the Issuer) or the Issuer (acting in a reasonable manner) (as applicable) determines is
recognised or acknowledged as being in customary market usage in international debt
capital markets transactions which reference the Reference Rate, where such rate has
been replaced by the Successor Rate or the Alternative Reference Rate (as applicable); or

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(iii) if no such customary market usage is recognised or acknowledged, the Independent
Adviser (in consultation with the Issuer) or the Issuer in its discretion (as applicable),
determines (acting in a reasonable manner) to be appropriate;

“Alternative Reference Rate” means the rate that the Independent Adviser or the Issuer (as
applicable) determines has replaced the relevant Reference Rate in customary market usage in
the international debt capital markets for the purposes of determining rates of interest in
respect of bonds denominated in the Specified Currency and of a comparable duration to the
relevant Interest Period, or, if the Independent Adviser or the Issuer (as applicable) determines
that there is no such rate, such other rate as the Independent Adviser or the Issuer (as
applicable) determines in its discretion (acting in a reasonable manner) is most comparable to
the relevant Reference Rate;

“Benchmark Event” means, in respect of a Reference Rate:

(i) such Reference Rate ceasing be published for a period of at least five business days or
ceasing to exist;

(ii) a public statement by the administrator of such Reference Rate that it will, by a specified
date within the following six months, cease publishing such Reference Rate permanently
or indefinitely (in circumstances where no successor administrator has been appointed
that will continue publication of such Reference Rate);

(iii) a public statement by the supervisor of the administrator of such Reference Rate that such
Reference Rate has been or will, by a specified date within the following six months, be
permanently or indefinitely discontinued;

(iv) a public statement by the supervisor of the administrator of such Reference Rate that
means such Reference Rate will be prohibited from being used or that its use will be
subject to restrictions or adverse consequences, in each case within the following six
months; or

(v) it has become unlawful for any Paying Agent, Calculation Agent, the Issuer or other party
to calculate any payments due to be made to any Noteholder using such Reference Rate;

“Independent Adviser” means an independent financial institution of international repute or

other independent financial adviser of recognised standing and with appropriate expertise, in
each case appointed by the Issuer at its own expense;

“Margin” has the meaning given in the applicable Pricing Supplement; “Reference Rate” has
the meaning given in the applicable Pricing Supplement; “Relevant Nominating Body” means,
in respect of a reference rate:

(i) the central bank for the currency to which the reference rate relates, or any central bank or
other supervisory authority which is responsible for supervising the administrator of the
reference rate; or

(ii) any working group or committee sponsored by, chaired or co-chaired by or constituted at
the request of (a) the central bank for the currency to which the reference rate relates, (b)
any central bank or other supervisory authority which is responsible for supervising the
administrator of the reference rate, (c) a group of the aforementioned central banks or
other supervisory authorities, or (d) the Financial Stability Board or any part thereof; and

“Successor Rate” means the rate that the Independent Adviser or the Issuer (as applicable)
determines is a successor to or replacement of the Reference Rate which is formally
recommended by any Relevant Nominating Body.

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5.3 Interest on Dual Currency Interest Notes

The rate or amount of interest payable in respect of Dual Currency Interest Notes shall be
determined in the manner specified in the applicable Pricing Supplement.

5.4 Interest on Partly Paid Notes

In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero Coupon Notes),
interest will accrue as aforesaid on the paid-up nominal amount of such Notes and otherwise as
specified in the applicable Pricing Supplement.

5.5 Accrual of interest

Each Note (or in the case of the redemption of part only of a Note, that part only of such Note) will
cease to bear interest (if any) from the date for its redemption unless, payment of principal is
improperly withheld or refused. In such event, interest will continue to accrue until whichever is the
earlier of:

(a) the date on which all amounts due in respect of such Note have been paid; and

(b) as provided in the Trust Deed.

6 PAYMENTS

6.1 Method of payment

Subject as provided below:

(a) payments in a Specified Currency other than euro and Renminbi will be made by credit or
transfer to an account in the relevant Specified Currency (which, in the case of a payment in
Japanese yen to a non-resident of Japan, shall be a non-resident account) maintained by the
payee with a bank in the principal financial centre of the country of such Specified Currency
(which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney
and Auckland, respectively);

(b) payments in euro will be made by credit or transfer to a euro account (or any other account to
which euro may be credited or transferred) specified by the payee; and

(c) payments in Renminbi will be made by transfer to a Renminbi account maintained by or on

behalf of the payee with a bank in Hong Kong.

Payments will be subject in all cases to (i) any fiscal or other laws and regulations applicable thereto
in the place of payment, but without prejudice to the provisions of Condition 8 and (ii) any
withholding or deduction required pursuant to an agreement described in Section 1471(b) of the
U.S. Internal Revenue Code of 1986 (the “Code”) or otherwise imposed pursuant to Sections 1471
through 1474 of the Code, any regulations or agreements thereunder, any official interpretations
thereof, or (without prejudice to the provisions of Condition 8) any law implementing an
intergovernmental approach thereto.

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6.2 Presentation of Definitive Bearer Notes, Receipts and Coupons

Payments of principal in respect of Definitive Bearer Notes not held in the CMU will (subject as
provided below) be made in the manner provided in Condition 6.1 above only against presentation
and surrender (or, in the case of part payment of any sum due, endorsement) of Definitive Bearer
Notes, and payments of interest in respect of Definitive Bearer Notes will (subject as provided
below) be made as aforesaid only against presentation and surrender (or, in the case of part payment
of any sum due, endorsement) of Coupons, in each case at the specified office of any Paying Agent
outside the United States (which expression, as used herein, means the United States of America
(including the States and the District of Columbia and its possessions)).

Payments of Instalment Amounts (if any) in respect of Definitive Bearer Notes not held in the CMU,
other than the final Instalment Amount, will (subject as provided below) be made in the manner
provided in Condition 6.1 above only against presentation and surrender (or, in the case of part
payment of any sum due, endorsement) of the relevant Receipt in accordance with the preceding
paragraph. Payment of the final Instalment Amount will be made in the manner provided in
Condition 6.1 above only against presentation and surrender (or, in the case of part payment of any
sum due, endorsement) of the relevant Definitive Bearer Note in accordance with the preceding
paragraph. Each Receipt must be presented for payment of the relevant Instalment Amount together
with the Definitive Bearer Note to which it appertains. Receipts presented without the Definitive
Bearer Note to which they appertain do not constitute valid obligations of the Issuer. Upon the date
on which any Definitive Bearer Note becomes due and repayable, unmatured Receipts (if any)
relating thereto (whether or not attached) shall become void and no payment shall be made in
respect thereof.

Fixed Rate Notes in definitive bearer form not held in the CMU (other than Dual Currency Notes,
Index Linked Notes or Long Maturity Notes (as defined below)) should be presented for payment
together with all unmatured Coupons appertaining thereto (which expression shall for this purpose
include Coupons falling to be issued on exchange of matured Talons), failing which the amount of
any missing unmatured Coupon (or, in the case of payment not being made in full, the same
proportion of the amount of such missing unmatured Coupon as the sum so paid bears to the sum
due) will be deducted from the sum due for payment. Each amount of principal so deducted will be
paid in the manner mentioned above against surrender of the relative missing Coupon at any time
before the expiry of 10 years after the Relevant Date (as defined in Condition 8) in respect of such
principal (whether or not such Coupon would otherwise have become void under Condition 9) or, if
later, five years from the date on which such Coupon would otherwise have become due, but in no
event thereafter.

Upon any Fixed Rate Note in definitive bearer form becoming due and repayable prior to its
Maturity Date, all unmatured Talons (if any) appertaining thereto will become void and no further
Coupons will be issued in respect thereof.

Upon the date on which any Floating Rate Note, Dual Currency Note, Index Linked Note or Long
Maturity Note in definitive bearer form not held in the CMU becomes due and repayable, unmatured
Coupons and Talons (if any) relating thereto (whether or not attached) shall become void and no
payment or, as the case may be, exchange for further Coupons shall be made in respect thereof. A
“Long Maturity Note” is a Fixed Rate Note (other than a Fixed Rate Note which on issue had a
Talon attached) whose nominal amount on issue is less than the aggregate interest payable thereon
provided that such Note shall cease to be a Long Maturity Note on the Interest Payment Date on
which the aggregate amount of interest remaining to be paid after that date is less than the nominal
amount of such Note.

In the case of Definitive Bearer Notes held in the CMU, payment will be made to the person(s) for
whose account(s) interest in the relevant Definitive Bearer Note are credited as being held with the
CMU in accordance with the CMU Rules at the relevant time as notified to the CMU Lodging Agent
by the CMU in a relevant CMU Instrument Position Report or any relevant notification by CMU,

81
 which notification shall be conclusive evidence of the records of CMU (save in the case of manifest
error) and payment made in accordance thereof shall discharge the obligations of the Issuer in
respect of that payment.

If the due date for redemption of any Definitive Bearer Note is not an Interest Payment Date, interest
(if any) accrued in respect of such Note from (and including) the preceding Interest Payment Date
or, as the case may be, the Interest Commencement Date shall be payable only against surrender of
the relevant Definitive Bearer Note.

6.3 Payments in respect of Bearer Global Notes

Payments of principal and interest (if any) in respect of any Bearer Global Note will (subject as
provided below) be made in the manner specified above in relation to Definitive Bearer Notes or
otherwise in the manner specified in the relevant Bearer Global Note (i) in the case of a Bearer
Global Note lodged with the CMU, to the person(s) for whose account(s) interests in the relevant
Bearer Global Note are credited as being held by the CMU in accordance with the CMU Rules at the
relevant time as notified to the CMU Lodging Agent by the CMU in a relevant CMU Instrument
Position Report or any relevant notification by the CMU, which notification shall be conclusive
evidence of the records of the CMU (save in the case of manifest error) and payment made in
accordance thereof shall discharge the obligations of the Issuer in respect of that payment, or (ii) in
the case of a Bearer Global Note not lodged with the CMU, against presentation or surrender, as the
case may be, of such Bearer Global Note at the specified office of any Paying Agent outside the
United States. A record of each payment made, distinguishing between any payment of principal and
any payment of interest, will be made (in the case of a Bearer Global Note not lodged with the CMU)
on such Bearer Global Note either by the Paying Agent to which it was presented or in the records of
Euroclear and Clearstream, Luxembourg, as applicable or (in the case of a Bearer Global Note
lodged with the CMU) on withdrawal of such Bearer Global Note by the CMU Lodging Agent, and
in such case, such record shall be prima facie evidence that the payment in question has been made.

6.4 Payments in respect of Registered Notes

Payments of principal (other than Instalment Amounts prior to the final Instalment Amount) in
respect of each Registered Note will be made against presentation and surrender (or, in the case of
part payment of any sum due, endorsement) of the Registered Note at the specified office of the
Registrar or any of the Paying Agents. Such payments will be made on the due date by transfer to the
Designated Account (as defined below) of the holder (or the first named of joint holders) of the Note
in registered form appearing in the register of holders of the Notes in registered form maintained by
the Registrar (the “Register”) (i) where in global form, at the close of the business day (being for
this purpose, in respect of Notes clearing through Euroclear and Clearstream, Luxembourg, a day on
which Euroclear and Clearstream, Luxembourg are open for business and in respect of Notes
clearing through the CMU, a day on which the CMU is open for business) before the relevant due
date, and (ii) where in definitive form, at the close of business on the third business day (being for
this purpose a day on which banks are open for business in the city where the specified office of the
Registrar is located) before the relevant due date. For these purposes, “Designated Account” means
the account (which, in the case of a payment in Japanese yen to a non-resident of Japan, shall be a
non-resident account and, in the case of a payment in Renminbi, means the Renminbi account
maintained by or on behalf of the payee with a bank in Hong Kong, details of which appear on the
Register at the close of business on the fifth business day before the due date for payment)
maintained by a holder with a Designated Bank and identified as such in the Register and
“Designated Bank” means (in the case of payment in a Specified Currency other than euro and
Renminbi) a bank in the principal financial centre of the country of such Specified Currency (which,
if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney or Auckland,
respectively) and (in the case of a payment in euro) any bank which processes payments in euro and
(in the case of a payment in Renminbi) a bank in Hong Kong.

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 Payments of interest and payments of Instalment Amounts (other than the final Instalment Amount)
in respect of each Registered Note will be made on the due date to the Designated Account of the
holder (or the first named of joint holders) of the Note in registered form appearing in the Register
(i) where in global form, at the close of the business day (being for this purpose, in respect of Notes
clearing through Euroclear and Clearstream, Luxembourg, a day on which Euroclear and
Clearstream, Luxembourg are open for business and in respect of Notes clearing through the CMU,
a day on which the CMU is open for business) before the relevant due date, and (ii) where in
definitive form, at the close of business on the fifth day (in the case of Renminbi) and the fifteenth
day (in the case of a currency other than Renminbi, whether or not such fifteenth day is a business
day) before the relevant due date (the “Record Date”) at his address shown in the Register on the
Record Date and at his risk. Payments of interest and payments of instalments of principal (other
than the final instalment) in Renminbi shall be made by transfer to the registered account of the
payee. Upon application of the holder to the specified office of the Registrar not less than three
business days in the city where the specified office of the Registrar is located before the due date for
any payment of interest or an Instalment Amount (other than the final Instalment Amount) in respect
of a Note in registered form, the payment may be made by transfer on the due date in the manner
provided in the preceding paragraph. Any such application for transfer shall be deemed to relate to
all future payments of interest (other than interest due on redemption) and Instalment Amounts
(other than the final Instalment Amount) in respect of the Notes in registered form which become
payable to the holder who has made the initial application until such time as the Registrar is notified
in writing to the contrary by such holder. Payment of the interest due in respect of each Note in
registered form on redemption and the final Instalment Amount will be made in the same manner as
payment of the principal amount of such Note.

In the case of Definitive Registered Note or Registered Global Note held through the CMU, payment
will be made at the discretion of the registered holder to the CMU Accountholders and such payment
shall discharge the obligation of the Issuer in respect of that payment.

No commissions or expenses shall be charged to the holders by the Registrar in respect of any
payments of principal or interest in respect of the Registered Note.

None of the Issuer, the Guarantor, the Trustee or the Agents will have any responsibility or liability
for any aspect of the records relating to, or payments made on account of, beneficial ownership
interests in the Registered Global Notes or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.

6.5 General provisions applicable to payments

The holder of a Global Note (if the Global Note is not lodged with the CMU) or (if the Global Note
is lodged with the CMU) the person(s) for whose account(s) interests in such Global Note are
credited as being held through the CMU in accordance with the CMU Rules as notified to the CMU
Lodging Agent by the CMU in a relevant CMU Instrument Position Report or any other relevant
notification by CMU (which notification, in either case, shall be conclusive evidence of the records
of the CMU save in the case of manifest error), shall be the only persons(s) entitled to receive
payments in respect of Notes represented by such Global Note and the Issuer, or as the case may be,
the Guarantor will be discharged by payment to, or to the order of, the holder of such Global Note or
such person(s) for whose account(s) interests in such Global Note are credited as being held in the
CMU, as the case may be, in respect of each amount so paid. Each of the persons shown in the
records of Euroclear, Clearstream, Luxembourg or the CMU, as the beneficial holder of a particular
nominal amount of Notes represented by such Global Note must look solely to Euroclear,
Clearstream, Luxembourg or the CMU, as the case may be, for his share of each payment so made by
the Issuer, or as the case may be, the Guarantor to, or to the order of, the holder of such Global Note.

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 Notwithstanding the foregoing provisions of this Condition, if any amount of principal and/or
interest in respect of Bearer Notes is payable in U.S. dollars, such U.S. dollar payments of principal
and/or interest in respect of such Notes will be made at the specified office of a Paying Agent in the
United States if:

(a) the Issuer has appointed Paying Agents with specified offices outside the United States with
the reasonable expectation that such Paying Agents would be able to make payment in U.S.
dollars at such specified offices outside the United States of the full amount of principal and
interest on the Bearer Notes in the manner provided above when due;

(b) payment of the full amount of such principal and interest at all such specified offices outside
the United States is illegal or effectively precluded by exchange controls or other similar
restrictions on the full payment or receipt of principal and interest in U.S. dollars; and

(c) such payment is then permitted under United States law without involving, in the opinion of
the Issuer and the Guarantor, adverse tax consequences to the Issuer or the Guarantor.

6.6 Payment Day

If the date for payment of any amount in respect of any Note, Receipt or Coupon is not a Payment
Day (as defined below), the holder thereof shall not be entitled to payment until the next following
Payment Day in the relevant place and shall not be entitled to further interest or other payment in
respect of such delay. For these purposes, “Payment Day” means any day which (subject to
Condition 9) is:

(a) a day on which commercial banks and foreign exchange markets settle payments and are open
for general business (including dealing in foreign exchange and foreign currency deposits) in:

(i) the relevant place of presentation;

(ii) each Additional Financial Centre (other than TARGET2 System) specified in the
applicable Pricing Supplement;

(iii) if TARGET2 System is specified as an Additional Financial Centre in the applicable

Pricing Supplement, a day on which the TARGET2 System is open; and

(b) either (i) in relation to any sum payable in a Specified Currency other than euro and Renminbi,
a day on which commercial banks and foreign exchange markets settle payments and are open
for general business (including dealing in foreign exchange and foreign currency deposits) in
the principal financial centre of the country of the relevant Specified Currency (which if the
Specified Currency is Australian dollars or New Zealand dollars shall be Sydney and
Auckland, respectively), (ii) in relation to any sum payable in euro, a day on which the
TARGET2 System is open or (iii) in relation to any sum payable in Renminbi, a day on which
banks and foreign exchange markets are open for business and settlement of Renminbi
payments in Hong Kong.

6.7 Interpretation of principal and interest

Any reference in the Conditions to principal in respect of the Notes shall be deemed to include, as
applicable:

(a) any additional amounts which may be payable with respect to principal under Condition 8 or
under any undertaking or covenant given in addition thereto, or in substitution therefor,
pursuant to the Trust Deed;

(b) the Final Redemption Amount of the Notes;

(c) the Early Redemption Amount of the Notes;

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 (d) the Optional Redemption Amount(s) (if any) of the Notes;

(e) in relation to Notes redeemable in instalments, the Instalment Amounts;

(f) in relation to Zero Coupon Notes, the Amortised Face Amount (as defined in Condition 7.6);
and

(g) any premium and any other amounts (other than interest) which may be payable by the Issuer
under or in respect of the Notes.

Any reference in the Conditions to interest in respect of the Notes shall be deemed to include, as
applicable, any additional amounts which may be payable with respect to interest under Condition 8
or under any undertaking or covenant given in addition thereto, or in substitution therefor, pursuant
to the Trust Deed.

7 REDEMPTION AND PURCHASE

7.1 Redemption at maturity

Unless previously redeemed or purchased and cancelled as specified below, each Note (including
each Index Linked Redemption Note and Dual Currency Redemption Note) will be redeemed by the
Issuer at its Final Redemption Amount specified in, or determined in the manner specified in, the
applicable Pricing Supplement in the relevant Specified Currency on the Maturity Date.

7.2 Redemption for tax reasons

If the Issuer satisfies the Trustee immediately before the giving of the notice referred to below that:

(a) as a result of any change in, or amendment to, the laws or regulations of a Relevant Jurisdiction
(as defined in Condition 8.1), or any change in the application or official interpretation of the
laws or regulations of a Relevant Jurisdiction, which change or amendment becomes effective
on or after the date on which agreement is reached to issue the first Tranche of the Notes, on the
occasion of the next payment due under the Notes either (i) the Issuer would be required to pay
additional amounts as provided or referred to in Condition 8 or (ii) the Guarantor would be
unable for reasons outside its control to procure payment by the Issuer and in making payment
itself would be required to pay such additional amounts; and

(b) the requirement cannot be avoided by the Issuer or, as the case may be, the Guarantor taking
reasonable measures available to it,

the Issuer may at its option, having given not less than 30 nor more than 60 days’ notice to the
Noteholders in accordance with Condition 14 (which notice shall be irrevocable), redeem all the
Notes, but not some only, at any time (if this Note is neither a Floating Rate Note, an Index Linked
Interest Note nor a Dual Currency Interest Note) or on any Interest Payment Date (if this Note is
either a Floating Rate Note, an Index Linked Interest Note or a Dual Currency Interest Note) at their
Early Redemption Amount referred to in Condition 7.6 below together with interest accrued to but
excluding the date of redemption, provided that no such notice of redemption shall be given earlier
than 90 days prior to the earliest date on which the Issuer or, as the case may be, the Guarantor
would be obliged to pay such additional amounts, were a payment in respect of the Notes then due.
Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall
deliver to the Trustee a certificate signed by two Directors of the Issuer or, as the case may be, the
Guarantor stating that the requirement referred to in (a) above will apply and cannot be avoided by
the Issuer or, as the case may be, the Guarantor taking reasonable measures available to it, and the
Trustee shall be entitled to accept the certificate as sufficient evidence of the satisfaction of the
conditions precedent set out above, in which event it shall be conclusive and binding on the
Noteholders.

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7.3 Redemption at the option of the Issuer (Issuer Call)

If Issuer Call is specified in the applicable Pricing Supplement, the Issuer may, having given:

(a) not less than 15 nor more than 30 days’ notice to the Noteholders in accordance with Condition
14; and

(b) not less than 15 days before the giving of the notice referred to in (a) above, notice to the
Trustee, the Principal Paying Agent and the Guarantor and, in the case of a redemption of
Registered Notes, the Registrar;

(which notice shall be irrevocable and shall specify the date fixed for redemption), redeem all or
some only of the Notes then outstanding on any Optional Redemption Date and at the Optional
Redemption Amount(s) specified in, or determined in the manner specified in, the applicable Pricing
Supplement together, if appropriate, with interest accrued to (but excluding) the relevant Optional
Redemption Date. Any such redemption must be of a nominal amount not less than the Minimum
Redemption Amount and not more than the Maximum Redemption Amount, in each case as may be
specified in the applicable Pricing Supplement. In the case of a partial redemption of Notes, the
Notes to be redeemed (“Redeemed Notes”) will be selected individually by lot, in the case of
Redeemed Notes represented by definitive Notes, and in accordance with the rules of Euroclear
and/or Clearstream, Luxembourg (to be reflected in the records of Euroclear and Clearstream,
Luxembourg as either a pool factor or a reduction in nominal amount, at their discretion) and/or the
CMU (as appropriate), in the case of Redeemed Notes represented by a Global Note, not more than
30 days prior to the date fixed for redemption (such date of selection being hereinafter called the
“Selection Date”). In the case of Redeemed Notes represented by definitive Notes, a list of the
serial numbers of such Redeemed Notes will be published in accordance with Condition 14 not less
than 15 days prior to the date fixed for redemption. The aggregate nominal amount of Redeemed
Notes represented by definitive Notes or represented by a Global Note shall in each case bear the
same proportion to the aggregate nominal amount of all Redeemed Notes as the aggregate nominal
amount of definitive Notes outstanding and Notes outstanding represented by such Global Note,
respectively, bears to the aggregate nominal amount of the Notes outstanding, in each case on the
Selection Date, provided that, if necessary, appropriate adjustments shall be made to such nominal
amounts to ensure that each represents an integral multiple of the Calculation Amount. No exchange
of the relevant Global Note will be permitted during the period from (and including) the Selection
Date to (and including) the date fixed for redemption pursuant to this Condition 7.3 and notice to
that effect shall be given by the Issuer to the Noteholders in accordance with Condition 14 at least
five days prior to the Selection Date.

7.4 Redemption at the option of the Noteholders (Investor Put)

If Investor Put is specified in the applicable Pricing Supplement, upon the holder of any Note giving
to the Issuer, in accordance with Condition 14, not less than 45 nor more than 60 days’ notice, the
Issuer will, upon the expiry of such notice, redeem, subject to, and in accordance with, the terms
specified in the applicable Pricing Supplement such Note on the Optional Redemption Date and at
the Optional Redemption Amount, together, if appropriate, with interest accrued to (but excluding)
the relevant Optional Redemption Date. Registered Notes may be redeemed under this Condition 7.4
in any multiple of their lowest Specified Denomination. It may be that before an Investor Put can be
exercised, certain conditions and/or circumstances will need to be satisfied. Where relevant, the
provisions will be set out in the applicable Pricing Supplement. Such option shall operate as set out
below in Condition 7.4.

To exercise the right to require redemption of the Notes pursuant to this Condition 7.4, the holder of
this Note must, if this Note is in definitive form and held outside Euroclear, Clearstream,
Luxembourg and the CMU, deliver, at the specified office of any Paying Agent (in the case of Bearer
Notes) or the Registrar (in the case of Registered Notes), at any time during the normal business
hours of such Paying Agent or, as the case may be, the Registrar falling within the notice period, a

86
 duly signed and completed notice of exercise in the form (for the time being current) obtainable
from any specified office of any Paying Agent or, as the case may be, the Registrar (a “Put Notice”)
and in which the holder must specify a bank account to which payment is to be made under this
Condition and, in the case of Registered Notes, the nominal amount thereof to be redeemed and, if
less than the full nominal amount of the Registered Notes so surrendered is to be redeemed, an
address to which a new Registered Note in respect of the balance of such Registered Notes is to be
sent subject to and in accordance with the provisions of Condition 2.2. If such Note is in definitive
bearer form, the Put Notice must be accompanied by this Note or evidence satisfactory to the Paying
Agent concerned that this Note will, following delivery of the Put Notice, be held to its order or
under its control. If this Note is represented by a Global Note or is in definitive form and held
through Euroclear or Clearstream, Luxembourg or the CMU, to exercise the right to require
redemption of this Note, the holder of this Note must, within the notice period, give notice to the
Principal Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered
Notes) of such exercise in accordance with the standard procedures of Euroclear and Clearstream,
Luxembourg or the CMU (which may include notice being given on his instruction by Euroclear or
Clearstream, Luxembourg or the CMU or any common depositary, as the case may be, for them to
the Principal Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered
Notes) by electronic means or notice being given to the CMU Lodging Agent) in a form acceptable
to Euroclear and Clearstream, Luxembourg or the CMU and the CMU Lodging Agent, as the case
may be, from time to time and, if this Note is represented by a Global Note held through Euroclear
or Clearstream, Luxembourg, at the same time present or procure the presentation of the relevant
Global Note to the Principal Paying Agent (in the case of Bearer Notes) or the Registrar (in the case
of Registered Notes) for notation accordingly.

Any Put Notice or other notice given in accordance with the standard procedures of Euroclear and
Clearstream, Luxembourg and the CMU given by a holder of any Note pursuant to this Condition 7.4
shall be irrevocable except where, prior to the due date of redemption, an Event of Default has
occurred and the Trustee has declared the Notes to be due and payable pursuant to Condition 10, in
which event such holder, at its option, may elect by notice to the Issuer to withdraw the notice given
pursuant to this Condition 7.4.

7.5 Redemption upon Change of Control

Following the occurrence of a Change of Control (as defined below), the holder of each Note will
have the right at such holder’s option, to require the Issuer to redeem all, but not some only, of that
holder’s Notes on the Change of Control Redemption Date (as defined below) at 100 per cent. of
their Early Redemption Amount together with accrued interest.

To exercise the right to require redemption of the Notes pursuant to Condition 7.5, the holder of this
Note must, if this Note is in definitive form and held outside Euroclear, Clearstream, Luxembourg
and the CMU, deliver, at the specified office of any Paying Agent (in the case of Bearer Notes) or the
Registrar (in the case of Registered Notes), at any time during the normal business hours of such
Paying Agent or, as the case may be, the Registrar by not later than the 30th day following a Change
of Control, or, if later, the 30th day following the date upon which notice thereof is given to
Noteholders by the Issuer in accordance with Condition 14, a duly completed and signed notice of
redemption in the form (for the time being current) obtainable from any specified office of any
Paying Agent or, as the case may be, the Registrar (the “Change of Control Redemption Notice”)
and in which the holder must specify a bank account to which payment is to be made under this
Condition. If such Note is in definitive bearer form, the Change of Control Redemption Notice must
be accompanied by this Note or evidence satisfactory to the Paying Agent concerned that this Note
will, following delivery of the Change of Control Redemption Notice, be held to its order or under
its control. If this Note is represented by a Global Note or is in definitive form and held through
Euroclear or Clearstream, Luxembourg or the CMU, to exercise the right to require redemption of
this Note, the holder of this Note must, within the notice period, give notice to the Principal Paying
Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes) of such
exercise in accordance with the standard procedures of Euroclear and Clearstream, Luxembourg or
the CMU (which may include notice being given on his instruction by Euroclear or Clearstream,

87
Luxembourg or the CMU or any common depositary, as the case may be, for them to the Principal
Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes) by
electronic means or notice being given to the CMU Lodging Agent) in a form acceptable to
Euroclear and Clearstream, Luxembourg or the CMU and the CMU Lodging Agent, as the case may
be, from time to time and, if this Note is represented by a Global Note held through Euroclear or
Clearstream, Luxembourg, at the same time present or procure the presentation of the relevant
Global Note to the Principal Paying Agent (in the case of Bearer Notes) or the Registrar (in the case
of Registered Notes) for notation accordingly.

A Change of Control Redemption Notice, once delivered, shall be irrevocable and the Issuer shall
redeem the Notes the subject of Change of Control Redemption Notices delivered as aforesaid on
the Change of Control Redemption Date.

The Trustee shall not be required to take any steps to ascertain whether a Change of Control or any
event which could lead to the occurrence of a Change of Control has occurred and will not be liable
to any person for any failure to do so.

The Issuer, failing whom the Guarantor, shall give notice to Noteholders and the Trustee in
accordance with Condition 14 by not later than 14 days following the first day on which it becomes
aware of the occurrence of a Change of Control, which notice shall specify the procedure for
exercise by holders of their rights to require redemption of the Notes pursuant to this Condition and
shall give brief details of the Change of Control.

For the purposes of this Condition 7.5:

(a) “Board of Directors” means the board of directors elected or appointed by the stockholders of
the Guarantor or otherwise in accordance with the memorandum and articles of association of
the Guarantor, to manage the business of the Guarantor.

(b) “Control” means (i) the ownership or control of more than 50 per cent. of the voting rights of
the issued share capital of the Guarantor or (ii) the right to appoint and/or remove all or the
majority of the members of the Guarantor’s board of directors or other governing body,
whether obtained directly or indirectly, and whether obtained by ownership of share capital,
the possession of voting rights, contract or otherwise.

(c) a “Change of Control” occurs when:

(i) the Controlling Persons cease to have Control of the Guarantor; or

(ii) the Guarantor consolidates with or merges into or sells or transfers all or substantially all
of the Guarantor’s assets to any Person or Persons other than one or more Controlling
Persons, unless the consolidation, merger, sale or transfer will not result in the other
Person or Persons acquiring Control over the Guarantor or the successor entity; or

(iii) the number of Executive Directors on the Board of Directors that are not Existing
Directors exceeds the number of Executive Directors that are Existing Directors.

(d) “Change of Control Redemption Date” shall be the fourteenth day after the expiry of such
period of 30 days after the later of a Change of Control or the date upon which notice of a
Change of Control is given to Noteholders by the Issuer in accordance with Condition 14 as
referred to above.

(e) “Controlling Persons” means (i) any trusts established for Dr. Chen Din Hwa’s benefit or the
benefit of his beneficiaries or for charitable purposes and/or (ii) any of Dr. Chen Din Hwa’s
executors, administrators, personal representatives or similar representatives, and/or (iv) any
member of Dr. Chen’s family and/or any of their associated companies (as defined in the
Listing Rules of The Stock Exchange of Hong Kong Limited) and/or any trust established for
the benefit of such persons or their respective beneficiaries.

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 (f) “Executive Directors” means a member of the Board of Directors of the Guarantor who (a)
actively participates in, or (b) is responsible for directly supervising, or exercises managerial
responsibility over, the business of the Guarantor and/or the Group.

(g) “Existing Directors” means, at any time, (i) Executive Directors which were Executive
Directors on 17 June 2012 and (ii) Executive Directors which were recommended by the Board
of Directors to be appointed and were appointed as Executive Directors by (x) the shareholders
of the Guarantor in general meeting or (y) a majority of the Board of Directors.

(h) “Person” includes any individual, company, corporation, firm, partnership, joint venture,
undertaking, association, organisation, trust, state or agency of a state (in each case whether or
not being a separate legal entity) but does not include the Guarantor’s board of directors or any
other governing board and does not include the Guarantor’s wholly-owned direct or indirect
subsidiaries.

7.6 Early Redemption Amounts

For the purpose of Condition 7.2 and Condition 7.5 above and Condition 10, each Note will be
redeemed at its Early Redemption Amount calculated as follows:

(a) in the case of a Note (other than a Zero Coupon Note, an Instalment Note and a Partly Paid
Note) with a Final Redemption Amount equal to the Issue Price, at the Final Redemption
Amount thereof;

(b) in the case of a Note (other than a Zero Coupon Note but including an Instalment Note and a
Partly Paid Note) with a Final Redemption Amount which is or may be less or greater than the
Issue Price or which is payable in a Specified Currency other than that in which the Note is
denominated, at the amount specified in, or determined in the manner specified in, the
applicable Pricing Supplement or, if no such amount or manner is so specified in the applicable
Pricing Supplement, at its nominal amount; or

(c) in the case of a Zero Coupon Note, at an amount (the “Amortised Face Amount”) calculated in
accordance with the following formula:

Early Redemption Amount = RP x (1+AY) y

where:

“RP” means the Reference Price;

“AY” means the Accrual Yield expressed as a decimal; and

“y” is the Day Count Fraction specified in the applicable

Pricing Supplement which will be either (i) “30/360” (in
which case the numerator will be equal to the number of
days (calculated on the basis of a 360-day year consisting
of 12 months of 30 days each) from (and including) the
Issue Date of the first Tranche of the Notes to (but
excluding) the date fixed for redemption or (as the case
may be) the date upon which such Note becomes due and
repayable and the denominator will be 360) or (ii)
“Actual/360” (in which case the numerator will be equal to
the actual number of days from (and including) the Issue
Date of the first Tranche of the Notes to (but excluding) the
date fixed for redemption or (as the case may be) the date
upon which such Note becomes due and repayable and the
denominator will be 360) or (iii) “Actual/365” (in which
case the numerator will be equal to the actual number of
days from (and including) the Issue Date of the first
Tranche of the Notes to (but excluding) the date fixed for
redemption or (as the case may be) the date upon which
such Note becomes due and repayable and the denominator
will be 365).

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7.7 Instalments

Instalment Notes will be redeemed in the Instalment Amounts and on the Instalment Dates. In the
case of early redemption, the Early Redemption Amount will be determined pursuant to Condition
7.6.

7.8 Partly Paid Notes

Partly Paid Notes will be redeemed, whether at maturity, early redemption or otherwise, in
accordance with the provisions of this Condition and the applicable Pricing Supplement.

7.9 Purchases

The Issuer, the Guarantor or any of the Guarantor’s other Subsidiaries may at any time purchase
Notes (provided that, in the case of Definitive Bearer Notes, all unmatured Receipts, Coupons and
Talons appertaining thereto are purchased therewith) in any manner and at any price.

7.10 Cancellation

All Notes which are (a) redeemed or (b) purchased by or on behalf of the Issuer, the Guarantor or
any of the Guarantor’s other Subsidiaries will forthwith be cancelled (together with all unmatured
Receipts, Coupons and Talons attached thereto or surrendered therewith at the time of redemption).
All Notes so cancelled (together with all unmatured Receipts, Coupons and Talons cancelled
therewith) shall be forwarded to the Principal Paying Agent and cannot be reissued or resold.

7.11 Late payment on Zero Coupon Notes

If the amount payable in respect of any Zero Coupon Note upon redemption of such Zero Coupon
Note pursuant to Condition 7.1, 7.2, 7.3 or 7.4 above or upon its becoming due and repayable as
provided in Condition 10 is improperly withheld or refused, the amount due and repayable in respect
of such Zero Coupon Note shall be the amount calculated as provided in Condition 7.6(c) above as
though the references therein to the date fixed for the redemption or the date upon which such Zero
Coupon Note becomes due and payable were replaced by references to the date which is the earlier
of:

(a) the date on which all amounts due in respect of such Zero Coupon Note have been paid; and

(b) five days after the date on which the full amount of the moneys payable in respect of such Zero
Coupon Notes has been received by the Principal Paying Agent, the Registrar or the Trustee
and notice to that effect has been given to the Noteholders in accordance with Condition 14.

8 TAXATION

8.1 Payment without Withholding

All payments in respect of the Notes, Receipts and Coupons by or on behalf of the Issuer or the
Guarantor shall be made free and clear of, and without withholding or deduction for, or on account
of, any present or future taxes, duties, assessments or governmental charges of whatever nature
(“Taxes”) imposed or levied by or on behalf of any Relevant Jurisdictions, unless such withholding
or deduction of the Taxes is required by law. In such event, the Issuer or, as the case may be, the
Guarantor, will pay such additional amounts as may be necessary in order that the net amounts
received by the holders of the Notes, Receipts or Coupons after the withholding or deduction shall
equal the respective amounts which would have been receivable in respect of the Notes, Receipts or
Coupons, as the case may be, in the absence of such withholding or deduction; except that no such
additional amounts shall be payable in relation to any payment in respect of any Note, Receipt or
Coupon:

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 (a) presented for payment by or on behalf of a holder who is liable for such Taxes in respect of
such Note, Receipt or Coupon by reason of his having some connection with a Relevant
Jurisdiction other than the mere holding of such Note, Receipt or Coupon; or

(b) presented for payment more than 30 days after the Relevant Date (as defined below) except to
the extent that a holder would have been entitled to an additional amount on presenting the
same for payment on the last day of the period of 30 days assuming (whether or not such is in
fact the case) that day to have been a Payment Day (as defined in Condition 6.6).

As used in these Conditions:

(i) the “Relevant Date” means the date on which such payment first becomes due but, if the full
amount of the moneys payable has not been duly received by the Principal Paying Agent, the
Trustee or the Registrar, as the case may be, on or before such due date, it means the date on
which, the full amount of such moneys having been so received, notice to that effect is duly
given to the Noteholders by the Issuer in accordance with Condition 14; and

(ii) “Relevant Jurisdiction” means the British Virgin Islands or any political subdivision or any
authority thereof or therein having power to tax; or any other jurisdiction or any political
subdivision or any authority thereof or therein having power to tax to which the Issuer or the
Guarantor, as the case may be, becomes subject in respect of payments made by it of principal
or interest on the Notes.

8.2 Additional Amounts

Any reference in these Conditions to any amounts in respect of the Notes shall be deemed to include
any additional amounts which may be payable under this Condition 8 or any undertaking given in
addition to or in substitution of this Condition 8 pursuant to the Trust Deed.

9 PRESCRIPTION

The Notes (whether in bearer or registered form), Receipts and Coupons will become void unless
presented for payment within a period of 10 years (in the case of principal) and five years (in the
case of interest) after the Relevant Date (as defined in Condition 8).

There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the
claim for payment in respect of which would be void pursuant to this Condition or Condition 6.2 or
any Talon which would be void pursuant to Condition 6.2.

10 EVENTS OF DEFAULT AND ENFORCEMENT

10.1 Events of Default

The Trustee at its discretion may, and if so requested in writing by the holders of at least one-quarter
in principal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution of
the Noteholders shall (subject in each case to being indemnified and/or pre-funded and/or secured to
its satisfaction), give notice to the Issuer and the Guarantor that each Note is, and each Note shall
accordingly forthwith become, immediately due and repayable at its Early Redemption Amount
together with accrued interest as provided in the Trust Deed, if any of the following events (each an
“Event of Default”) shall occur and is continuing:

(a) if default is made in the payment of any principal or interest due in respect of the Notes or any
of them and such default continues for seven days in the case of principal and 14 days in the
case of interest; or

91
(b) if the Issuer or the Guarantor fails to perform or observe any of its other obligations under
these Conditions or the Trust Deed and (except in any case where the Trustee considers the
failure to be incapable of remedy, when no continuation or notice as is hereinafter mentioned
will be required) the failure continues for the period of 30 days (or such longer period as the
Trustee may permit) following the service by the Trustee on the Issuer or the Guarantor (as the
case may be) of notice requiring the same to be remedied; or

(c) if (i) any Indebtedness for Borrowed Money (as defined below) of the Issuer, the Guarantor or
any Principal Subsidiary becomes due and repayable prematurely by reason of an event of
default (however described); (ii) the Issuer, the Guarantor or any Principal Subsidiary fails to
make any payment in respect of any Indebtedness for Borrowed Money on the due date for
payment; (iii) default is made by the Issuer, the Guarantor or any Principal Subsidiary in
making any payment due under any guarantee and/or indemnity given by it in relation to any
Indebtedness for Borrowed Money of any other person, provided that no event described in this
subparagraph 10.1(c) shall constitute an Event of Default unless the relevant amount of
Indebtedness for Borrowed Money or other relative liability due and unpaid, either alone or
when aggregated (without duplication) with other amounts of Indebtedness for Borrowed
Money and/or other liabilities due and unpaid relative to all (if any) other events specified in (i)
to (iii) above which have occurred and are continuing, amount to at least US$30,000,000 (or its
equivalent in any other currency); or

(d) one or more judgment(s) or order(s) is rendered against the whole or a substantial part of the
property, assets or revenues of the Issuer, the Guarantor or any Principal Subsidiary and
continue(s) unsatisfied and unstayed for a period of 30 days after the date(s) thereof or, if later,
the date therein specified for payment; or

(e) a secured party takes possession, or a receiver, manager or other similar officer is appointed, of
the whole or a substantial part of the undertaking, assets and revenues of the Issuer, the
Guarantor or any Principal Subsidiary and such possession or appointment continues for a
period of 30 days after the date thereof; or

(f) if (i) the Issuer, the Guarantor or any Principal Subsidiary becomes insolvent or is unable to
pay its debts as they fall due, (ii) an administrator, receiver, liquidator or similar official of the
Issuer, the Guarantor or any Principal Subsidiary is appointed (or application for any such
appointment is made) with respect to the whole or a substantial part of the undertaking, assets
and revenues of the Issuer, the Guarantor or any Principal Subsidiary, or (iii) the Issuer, the
Guarantor or any Principal Subsidiary takes any action for a general readjustment or deferment
of its obligations or makes a general assignment or an arrangement or composition with or for
the benefit of its creditors or declares a moratorium in respect of all or a substantial part of its
indebtedness or guarantees of any indebtedness given by it; or

(g) if an order is made or an effective resolution is passed for the winding up, liquidation or
dissolution of the Issuer, the Guarantor or any Principal Subsidiary (otherwise than, in the case
of a direct or indirect Subsidiary of the Guarantor, for the purposes of or pursuant to an
amalgamation, reorganisation or restructuring whilst solvent, provided that all or substantially
all of the assets subsisting immediately prior to such amalgamation, reorganisation or
restructuring of such Subsidiary are transferred to or otherwise vested in the Guarantor or one
or more of its other Subsidiaries) or the Issuer, the Guarantor or any Principal Subsidiary
ceases or (through an official action of its Board of Directors) threatens to cease to carry on all
or a substantial part of its business (otherwise than, in the case of a direct or indirect Subsidiary
of the Guarantor, for the purposes of or pursuant to (x) an amalgamation, reorganisation or
restructuring whilst solvent provided that all or substantially all of the assets subsisting
immediately prior to such amalgamation, reorganisation or restructuring of such Subsidiary
are transferred to or otherwise vested in the Guarantor or one or more of its other Subsidiaries
or (y) as a result of disposal on arm’s length terms or (z) as approved by an Extraordinary
Resolution of the Noteholders); or

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 (h) if the Guarantee ceases to be, or is claimed by the Guarantor not to be, in full force and effect;
or

(i) if the Issuer ceases to be a subsidiary wholly-owned and controlled, directly or indirectly, by
the Guarantor; or

(j) if any event occurs which, under the laws of any Relevant Jurisdiction, has an analogous effect
to any of the events referred to in subparagraphs (d) to (g) above.

10.2 Interpretation

For the purposes of this Condition, “Indebtedness for Borrowed Money” means any indebtedness
(whether being principal, premium, interest or other amounts) for or in respect of any notes, bonds,
debentures, debenture stock, loan stock or other securities or any borrowed money or any liability
under or in respect of any acceptance or acceptance credit.

10.3 Enforcement

The Trustee may at any time, at its discretion and without notice, take such proceedings against the
Issuer and/or the Guarantor as it may think fit to enforce the provisions of the Trust Deed, the Notes,
the Receipts and the Coupons, but it shall not be bound to take any such proceedings or any other
action in relation to the Trust Deed, the Notes, the Receipts or the Coupons unless (i) it shall have
been so directed by an Extraordinary Resolution of the Noteholders or so requested in writing by the
holders of at least one-quarter in principal amount of the Notes then outstanding and (ii) it shall have
been indemnified and/or pre-funded and/or secured to its satisfaction.

No Noteholder, Receiptholder or Couponholder shall be entitled to proceed directly against the

Issuer or the Guarantor unless the Trustee, having become bound so to proceed, fails so to do within
a reasonable period and the failure shall be continuing.

11 REPLACEMENT OF NOTES, RECEIPTS, COUPONS AND TALONS

Should any Note, Receipt, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may
be replaced, subject to applicable laws, regulations and relevant stock exchange regulations, at the
specified office of the Principal Paying Agent or the Paying Agent (in the case of Bearer Notes,
Receipts or Coupons) or the Registrar (in the case of Registered Notes) upon payment by the
claimant of such costs and expenses as may be incurred in connection therewith and on such terms
as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Notes,
Receipts, Coupons or Talons must be surrendered before replacements will be issued.

12 AGENTS

The names of the initial Agents and their initial specified offices are set out below.

The Issuer and the Guarantor are entitled, with the prior written approval of the Trustee, to vary or
terminate the appointment of any Agent and/or appoint additional or other Agents and/or approve
any change in the specified office through which any Agent acts, provided that:

(a) there will at all times be a Principal Paying Agent and a Registrar (which will maintain the
register of Noteholders outside the United Kingdom);

(b) so long as the Notes are listed on any stock exchange or admitted to trading by any other
relevant authority and the same is required by such stock exchange or regulatory authority,
there will at all times be a Paying Agent (in the case of Notes in bearer form) and a Registrar

93
 and Transfer Agent (in the case of Notes in registered form) with a specified office in such
place as may be required by the rules and regulations of the relevant stock exchange or other
relevant authority; and

(c) (c) so long as the Notes are listed on the Singapore Exchange Securities Trading Limited (the
“SGX-ST”) and the rules of the SGX-ST so require, if the Notes are issued in definitive form,
there will at all times be a Paying Agent in Singapore.

In addition, the Issuer shall forthwith appoint a Paying Agent having a specified office in New York
City in the circumstances described in Condition 6.5. Any variation, termination, appointment or
change referred to in the preceding paragraph and/or appointment referred to in this paragraph shall
only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not
less than 30 nor more than 45 days’ prior notice thereof shall have been given to the Noteholders in
accordance with Condition 14.

In acting under the Agency Agreement, the Agents act solely as agents of the Issuer and the
Guarantor and, in certain circumstances specified therein, of the Trustee and do not assume any
obligation to, or relationship of agency or trust with, any Noteholders, Receiptholders or
Couponholders. The Agency Agreement contains provisions permitting any entity into which any
Agent is merged or converted or with which it is consolidated or to which it transfers all or
substantially all of its assets to become the successor paying agent.

13 EXCHANGE OF TALONS

On and after the Interest Payment Date on which the final Coupon comprised in any Coupon sheet
matures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the specified
office of the Principal Paying Agent or any other Paying Agent in exchange for a further Coupon
sheet including (if such further Coupon sheet does not include Coupons to (and including) the final
date for the payment of interest due in respect of the Note to which it appertains) a further Talon,
subject to the provisions of Condition 9.

14 NOTICES

All notices regarding Notes in bearer form will be deemed to be validly given if published in a daily
newspaper having general circulation in Hong Kong, or if such publication shall not be practicable,
in a daily newspaper with general circulation in Asia notified to the Trustee. It is expected that such
publication will be made in the Asian Wall Street Journal. The Issuer shall also ensure that notices
are duly published in a manner which complies with the rules and regulations of any stock exchange
or any other relevant authority on which the Notes in bearer form are for the time being listed. Any
such notice will be deemed to have been given on the date of the first publication or, if required to be
published in more than one newspaper, on the date of the first publication in all required
newspapers. If publication as provided above is not practicable, a notice will be given in such other
manner, and will be deemed to have been given on such date, as the Trustee shall approve.

All notices regarding Notes in registered form will be deemed to be validly given if (a) sent by first
class mail or (if posted to an address overseas) by airmail to the holders (or the first named of joint
holders) at their respective addresses recorded in the Register and will be deemed to have been given
on the day after mailing and (b) if and for so long as any Notes in registered form are listed on a
stock exchange or are admitted to trading by another relevant authority and the rules of that stock
exchange or relevant authority so require, such notice will be published in a daily newspaper having
general circulation in the place or places required by those rules.

Until such time as any Notes in definitive form are issued, there may, so long as any Global Notes
representing the Notes are held in their entirety on behalf of (i) Euroclear and/or Clearstream,
Luxembourg, be substituted for such publication in such newspaper(s) the delivery of the relevant
notice to Euroclear and/or Clearstream, Luxembourg for communication by them to the holders of
the Notes or (ii) the CMU, be substituted for such publication in such newspaper(s) the delivery of

94
 the relevant notice to the persons shown in a CMU Instrument Position Report issued by the CMU on
the first business day preceding the date of despatch of such notice as holding interests in the
relevant Global Note and, in the case of both (i) and (ii) above, such notice shall be deemed to have
been given to the Noteholders on the date of delivery to Euroclear or Clearstream, Luxembourg or
the CMU as the case may be. In addition, in the case of both (i) and (ii) above, for so long as any
Notes are listed on a stock exchange or are admitted to trading by another relevant authority and the
rules of that stock exchange or relevant authority so require, such notice will be published in a daily
newspaper of general circulation in the place or places required by those rules. Any such notice shall
be deemed to have been given to the holders of the Notes on the fourth day after the day on which the
said notice was given to Euroclear and/or Clearstream, Luxembourg and/or the persons shown in the
relevant CMU Instrument Position Report.

Notices to be given by any Noteholder shall be in writing and given by lodging the same, together (in
the case of any Note in definitive form) with the relative Note or Notes, with the Principal Paying
Agent (in the case of Notes in bearer form) or the Registrar (in the case of Notes in registered form).
Whilst any of the Notes are represented by a Global Note, such notice may be given by any holder of
a Note to the Principal Paying Agent or the Registrar through Euroclear and/or Clearstream,
Luxembourg, and/or, in the case of Notes lodged with the CMU, by delivery by such holder of such
notice to the CMU Lodging Agent in Hong Kong, as the case may be, in such manner as the Principal
Paying Agent, the Registrar, the CMU Lodging Agent and Euroclear and/or Clearstream,
Luxembourg and/or the CMU, as the case may be, may approve for this purpose.

Receiptholders and Couponholders will be deemed for all purposes to have notice of the contents of
any notice given to the Noteholders in accordance with this Condition.

15 MEETINGS OF NOTEHOLDERS, MODIFICATIONS, WAIVER AND SUBSTITUTION

15.1 Meeting of Noteholders

The Trust Deed contains provisions for convening meetings of the Noteholders to consider any
matter affecting their interests, including the modification or abrogation by Extraordinary
Resolution of any of these Conditions or any of the provisions of the Trust Deed. The quorum at any
meeting for passing an Extraordinary Resolution will be one or more persons present holding or
representing more than 50 per cent. in principal amount of the Notes for the time being outstanding,
or at any adjourned such meeting one or more persons present whatever the principal amount of the
Notes held or represented by him or them, except that, at any meeting the business of which includes
the modification or abrogation of certain of the provisions of these Conditions and certain of the
provision of the Trust Deed, the necessary quorum for passing an Extraordinary Resolution will be
one or more persons present holding or representing not less than two-thirds, or at any adjourned
such meeting not less than one-third, of the principal amount of the Notes for the time being
outstanding. An Extraordinary Resolution passed at any meeting of the Noteholders will be binding
on all Noteholders, whether or not they are present at the meeting.

In addition, a resolution in writing signed by or on behalf of the Noteholders of not less than
three-fourth in principal amount of the Notes outstanding will take effect as if it were an
Extraordinary Resolution passed at a duly convened meeting. Such a resolution in writing may be
contained in one document or several documents in like form each signed by or on behalf of one or
more Noteholders.

15.2 Modifications and Waivers

The Trustee may, without the consent of the Noteholders, Receiptholders or Couponholders, agree
to any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of
these Conditions or any of the provisions of the Trust Deed, or determine, without any such consent
as aforesaid, that any Event of Default or Potential Event of Default (as defined in the Trust Deed)
shall not be treated as such (provided that, in any such case, it is not, in the opinion of the Trustee,
materially prejudicial to the interests of the Noteholders) or may agree, without any such consent as

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 aforesaid, to any modification which is, in its opinion, of a formal, minor or technical nature or to
correct a manifest error or to comply with mandatory provisions of law.

15.3 Notification to the Noteholders

Any such modification, waiver, authorisation or determination shall be binding on the Noteholders,
the Receiptholders and the Couponholders and unless the Trustee agrees otherwise, any such
authorisation, waiver or modification shall be notified to the Noteholders as soon as practicable
thereafter in accordance with Condition 14.

15.4 Trustee to have Regard to Interests of Noteholders as a Class

In connection with the exercise by it of any of its trusts, powers, authorities and discretions
(including, without limitation, any modification, waiver, authorisation, substitution or
determination), the Trustee shall have regard to the general interests of the Noteholders as a class
but shall not have regard to any interests arising from circumstances particular to individual
Noteholders, Receiptholders or Couponholders (whatever their number) and, in particular but
without limitation, shall not have regard to the consequences of any such exercise for individual
Noteholders, Receiptholders or Couponholders (whatever their number) resulting from their being
for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction
of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled
to require, nor shall any Noteholder, Receiptholder or Couponholder be entitled to claim, from the
Issuer, the Guarantor, the Trustee or any other person any indemnification or payment in respect of
any tax consequences of any such exercise upon individual Noteholders, Receiptholders or
Couponholders except to the extent already provided for in Condition 8 and/or any undertaking or
covenant given in addition to, or in substitution for, Condition 8 pursuant to the Trust Deed.

15.5 Substitution

The Trustee may, without the consent of the Noteholders, agree with the Issuer and the Guarantor to
the substitution in place of the Issuer (or of any previous substitute under this Condition) as the
principal debtor under the Notes, the Receipts, the Coupons and the Trust Deed by the Guarantor or
any of its other Subsidiaries, subject to (a) except in the case of substitution of the Guarantor in
place of the Issuer, the Notes being unconditionally and irrevocably guaranteed by the Guarantor,
(b) the Trustee being satisfied that the interests of the Noteholders will not be materially prejudiced
by the substitution and (c) certain other conditions set out in the Trust Deed being complied with.

No Noteholder shall, in connection with any substitution, be entitled to claim any indemnification or
payment in respect of any tax consequence thereof for such Noteholder, except to the extent
provided for in Condition 8 (or any undertaking given in addition to or substitution for it pursuant to
the provisions of the Trust Deed).

16 INDEMNIFICATION OF THE TRUSTEE AND TRUSTEE CONTRACTING WITH THE

ISSUER AND/OR THE GUARANTOR

16.1 Indemnification of the Trustee

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from
responsibility, including provisions relieving it from taking action unless indemnified and/or
secured and/or pre-funded to its satisfaction.

16.2 Trustee Contracting with the Issuer and/or the Guarantor

The Trust Deed also contains provisions pursuant to which the Trustee is entitled, inter alia, (a) to
enter into business transactions with the Issuer and/or the Guarantor and/or of the Guarantor’s other
Subsidiaries and to act as trustee for the holders of any other securities issued or guaranteed by, or
relating to, the Issuer and/or the Guarantor and/or any of the Guarantor’s other Subsidiaries, (b) to

96
 exercise and enforce its rights, comply with its obligations and perform its duties under or in
relation to any such transactions or, as the case may be, any such trusteeship without regard to the
interests of, or consequences for, the Noteholders, Receiptholders or Couponholders and (c) to
retain and not be liable to account for any profit made or any other amount or benefit received
thereby or in connection therewith.

17 FURTHER ISSUES

The Issuer shall be at liberty, from time to time, without the consent of the Noteholders, the
Receiptholders or the Couponholders and in accordance with the Trust Deed, to create and issue
further notes having terms and conditions the same as the Notes or the same in all respects save for
the amount and date of the first payment of interest thereon and so that the same shall be
consolidated and form a single Series with the outstanding Notes.

18 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

No person shall have any right to enforce any term or condition of this Note under the Contracts
(Rights of Third Parties) Act 1999, but this does not affect any right or remedy of any person which
exists or is available apart from that Act.

19 GOVERNING LAW AND SUBMISSION TO JURISDICTION

19.1 Governing law

The Trust Deed, the Agency Agreement, the Notes, the Receipts, the Coupons and the Talons and
any non-contractual obligations arising out of or in connection with the Trust Deed, the Agency
Agreement, the Notes, the Receipts, the Coupons and the Talons are governed by, and shall be
construed in accordance with, English law.

19.2 Submission to Jurisdiction

Each of the Issuer and the Guarantor irrevocably agrees, for the benefit of the Trustee, the
Noteholders, the Receiptholders and the Couponholders, that the courts of England are to have
jurisdiction to settle any disputes which may arise out of or in connection with the Trust Deed, the
Notes, the Receipts and/or the Coupons (including a dispute relating to any non-contractual
obligations arising out of or in connection with the Trust Deed, the Notes, the Receipts and/or the
Coupons) and that accordingly submits to the jurisdiction of the English courts.

Each of the Issuer and the Guarantor waives any objection to the courts of England on the grounds
that they are an inconvenient or inappropriate forum.

The Trustee, the Noteholders, the Receiptholders and the Couponholders may take any suit, action
or proceedings (together referred to as “Proceedings”) arising out of or in connection with the Trust
Deed, the Notes, the Receipts and the Coupons (including any Proceedings relating to any
non-contractual obligations arising out of or in connection with the Trust Deed, the Notes, the
Receipts and the Coupons) against the Issuer and the Guarantor in any other court of competent
jurisdiction and concurrent Proceedings in any number of jurisdictions.

19.3 Appointment of Process Agent

Each of the Issuer and the Guarantor irrevocably appoints Law Debenture Corporate Services
Limited at its registered office at Fifth Floor, 100 Wood Street, London EC2V 7EX, United
Kingdom as its agent for service of process and undertakes that, in the event of Law Debenture
Corporate Services Limited ceasing so to act or ceasing to be registered in England, it will appoint
another person approved by the Trustee as its agent for service of process in England in respect of
any Proceedings and notify the Noteholders of such appointment. Nothing herein shall affect the
right to serve proceedings in any other manner permitted by law.

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19.4 Other documents and the Guarantor

The Issuer and, where applicable, the Guarantor have in the Trust Deed and the Agency Agreement
submitted to the jurisdiction of the English courts and appointed an agent for service of process in
terms substantially similar to those set out above.

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 USE OF PROCEEDS

The net proceeds from the issue of each Tranche of Notes will be on-lent to the Guarantor and/or its
subsidiaries for general working capital purposes and the repayment and refinancing of existing
indebtedness of the Group. If, in respect of any particular issue, there is a particular identified use of
proceeds, this will be stated in the applicable Pricing Supplement.

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 CAPITALISATION AND INDEBTEDNESS

Capitalisation and Indebtedness of the Group

As at 30 June 2020, the Guarantor was authorised to issue a maximum of 1,000,000,000,000 no par value
shares of a single class and has 62,743,532,190 ordinary shares in issue.

The following table sets forth the consolidated capitalisation and indebtedness of the Group as at 31
March 2020:

As at
31 March 2020
HK$ ‘000
Short-term borrowings
Bank borrowings . . . . . . . . . . . . . . . . . . . . . . . .......................... 935,613
Long-term bank borrowings — current portion (1) .......................... 2,459,967
Long-term borrowings
Bank borrowings — non-current portion (1) . . . . . .......................... 16,194,984
Medium term notes . . . . . . . . . . . . . . . . . . . . . .......................... 12,618,383
Total borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,208,947

Equity attributable to owners of the Guarantor and holders of

perpetual capital securities (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,849,576

Total capitalisation (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137,058,523

Notes:
(1) The Group had secured bank borrowings of approximately HK$12,095 million as at 31 March 2020.
(2) Includes 5.5 per cent. perpetual capital securities with an aggregate principal of US$500 million (HK$3,896 million) issued
on 29 May 2017 and the related distribution.
(3) Total capitalisation equals the sum of total borrowings and equity attributable to owners of the Guarantor and holders of
perpetual capital securities.

Save as set out in the notes to the above table, there has been no material change in the total capitalisation
and indebtedness of the Group since 31 March 2020.

Capitalisation and Indebtedness of the Issuer

As at the date of this Offering Circular, the Issuer is authorised to issue a maximum of 50,000 shares of a
single class of US$1.00 par value and 1,000 shares have been issued to and are held by NF Treasury
Holdings Limited (formerly, Rainbow Joy Holdings Limited), an indirectly wholly-owned subsidiary of
the Guarantor, representing the entire issued capital of the Issuer.

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 DESCRIPTION OF THE ISSUER

Formation

Nan Fung Treasury Limited is a limited liability company incorporated under the BVI Business
Companies Act, 2004, as amended, of the British Virgin Islands (BVI Company Number: 1725454). It
was incorporated in the British Virgin Islands on 24 July 2012. Its registered office is at Commerce
House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British Virgin Islands. The Issuer is an
indirect wholly-owned subsidiary of Nan Fung.

Business Activity

The Issuer was established to raise financing for the Guarantor pursuant to the unrestricted objects and
powers set out in its memorandum of association. The Issuer does not sell any products or provide any
services and it has undertaken no business activities since the date of its incorporation, other than those
incidental to its incorporation and establishment as an indirect wholly-owned subsidiary of Nan Fung and
those incidental to the establishment of the Programme.

Financial Statements

Under British Virgin Islands law, the Issuer is not required to publish interim or annual financial
statements. The Issuer has not published, and does not propose to publish, any financial statements. The
Issuer is, however, required to keep records that are sufficient to show and explain its transactions and
will, at any time, enable the financial position of the Issuer to be determined with reasonable accuracy.

Directors and Officers

The Directors of the Issuer are Nelson TANG Chun Wai, Connie Charlotte BERRY and Billy HUI Him
Yeung and each of their business addresses are c/o Nan Fung at 23/F, Nan Fung Tower, 88 Connaught
Road C, Central, Hong Kong. None of the Directors of the Issuer holds any shares or options to acquire
shares of the Issuer. There are no conflicts of interest between the duties to the Issuer of the persons listed
above and their private interests and duties.

The Issuer does not have any employees and has no subsidiaries.

Share Capital

The Issuer is authorised under its memorandum of association to issue a maximum of 50,000 shares of a
single class of US$1.00 par value and 1,000 shares have been issued to and are held by NF Treasury
Holdings Limited (formerly, Rainbow Joy Holdings Limited), an indirect wholly-owned subsidiary of
Nan Fung. The register of members of the Issuer is maintained at its registered office in the British Virgin
Islands. No part of the equity securities of the Issuer is listed or dealt in on any stock exchange and no
listing or permission to deal in such securities is being or is proposed to be sought.

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 DESCRIPTION OF THE GROUP

Introduction

Pursuant to the Reorganisation (as described below), Nan Fung was incorporated in the British Virgin
Islands on 8 August 2011 (BVI Company Number 1665059). It is the holding company for a Hong
Kong-based property-focused conglomerate, which the Group believes is one of the largest privately
owned conglomerates in Hong Kong based on assets.

The Group has interests in, and engages in, property development, property investment, construction,
property management, mortgage financing and financial investment. The Group’s core business is
property development and investment. It has been developing properties in Hong Kong since 1965. It is a
fully integrated property developer in Hong Kong, with operations covering all principal stages of
property development, including acquisition, design, engineering and marketing. Hong Kong continues
to be the core market on which the Group focuses and across which it currently owns a portfolio of
residential, commercial and industrial properties. As at 31 March 2020, the Group’s track record of
property projects in Hong Kong amounted to over 67 million square feet (“sq.ft.”) of gross floor area
(“GFA”). The Group’s investment property portfolio was valued at HK$74,477 million as at 31 March
2020.

In recent years the Group has leveraged off its experience and success in the Hong Kong market to expand
into the PRC property market.

For information regarding the ownership of Nan Fung as at the date of this Offering Circular, see
“Shareholders, Directors’ Interests and Related Party Transactions”. The principal business activities of
the Group are as follows:

• Property development and investment: The Group has developed and invested in 175 properties in
Hong Kong since 1965 and these developments have been largely self-funded. The Group maintains
a strategic land bank in Hong Kong and has a well-established presence in Hong Kong. In recent
years, the Group has also entered the PRC property market, maintaining personnel and operations in
first-tier cities in the PRC. The Group primarily undertakes its property development and investment
business in the PRC either directly through its own operations, or through joint ventures with other
parties. In Hong Kong, the Group is primarily engaged in the development and sale of residential
and commercial properties. In addition, the Group owns and manages an investment and rental
property portfolio comprising offices, shopping malls, residential apartments, apartments with
customised services, hotels, industrial buildings and warehouses, most of which are located in Hong
Kong. The Group has also invested in residential and commercial property development projects in
Macau, Singapore, Japan, Malaysia, the United Kingdom and the United States.

• Property-related services: The Group is engaged in service businesses relating to its property
businesses, including construction, property management and mortgage financing services in Hong
Kong.

• Financial investment: The Group also has a significant financial investment portfolio that provides
a substantial liquidity buffer and stable recurring income for the Group. The management of the
Group’s financial investment portfolio is undertaken by Nan Fung Trinity (HK) Limited (a
subsidiary of the Group, see “Description of the Group — Financial Investment” below). With the
underlying assets and portfolio being a part of the Group’s assets, it provides a substantial liquidity
buffer and stable recurring income to the Group. Separately, in 2007 Nan Fung Consolidated
Investments Limited (“NFCI”), a company in which the Group and Crosby Group each have a 50 per
cent. economic interest, was formed to obtain a 50 per cent. ownership interest in HSBC NF China
Investors Limited, which was a joint venture formed with HSBC Specialist Investments Limited
(“HSIL”) to act as general partner of HSBC NF China Real Estate Fund, LP. In early 2011, a
management buy-out took place in HSIL (previously a wholly-owned subsidiary of The Hongkong
and Shanghai Banking Corporation Limited (“HSBC”)) resulting in the management of HSIL

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 owning 80.1 per cent. and HSBC owning 19.9 per cent. of HSIL. HSIL and HSBC NF China Real
Estate Fund, LP have since changed their names to InfraRed Capital Partners Limited (“InfraRed”)
and InfraRed NF China Real Estate Fund, L.P. (“Fund I”), respectively. NFCI and InfraRed have
established InfraRed NF China Real Estate Fund II, L.P. (“Fund II”) as a follow-on fund to Fund I.
See “Business — Financial Investment — Fund I and Fund II” below.

For the year ended 31 March 2020, Nan Fung reported consolidated revenue and profit attributable to the
owners of the Guarantor of approximately HK$5,989 million and HK$2,025 million, respectively. For the
year ended 31 March 2019, Nan Fung reported consolidated revenue and profit attributable to the owners
of the Guarantor of approximately HK$13,532 million and HK$6,023 million, respectively. As at 31
March 2020 and 2019, Nan Fung reported consolidated total assets of HK$160,933 million and
HK$159,965 million, respectively.

History

In 1954, Nan Fung’s founder, Dr. Chen Din Hwa (“Dr. Chen”), established Nan Fung Textiles Limited,
which specialised in cotton yarn production. It subsequently became the largest cotton yarn manufacturer
in Hong Kong in terms of volume, before growing into a large privately owned, Hong Kong-based
conglomerate.

In 1965, the Group completed its first property development, Fook Cheung Mansion in Yau Yat Tsuen.

Following a major reorganisation, Nan Fung Textiles Consolidated Limited was established in 1969 and
publicly listed on the Hong Kong stock exchange in 1970. Nan Fung Textiles Consolidated Limited
served as the holding company of Nan Fung Textiles Limited, Nan Fung Textiles Second Mill Limited and
Kin Fung Garments and Investments Limited. In 1989, Nan Fung Textiles Consolidated Limited was
privatised and became 100 per cent. owned by the Group. With effect from 5 July 2012, Nan Fung Textiles
Consolidated Limited has changed its name to Nan Fung Property Consolidated Limited.

In the 1970s, the Group purchased a site in Quarry Bay to develop it into what was at the time one of Hong
Kong’s largest residential developments, Nan Fung Sun Chuen. The project was completed in 1978 and
had a GFA of 1.6 million sq.ft., comprising 12 tower blocks and approximately 2,800 apartments. In the
same year, the Group made its initial overseas investments in the United States, Singapore and Malaysia.

In 1993, the Group made its first PRC investment in a Tianjin developer, Tianjin Tifen Industrial Park
Investment (Group) Co., Ltd. (“Tifen”), which is a joint venture set up between the Group, Singapore
Eastern Petroleum Group and Tianjin TEDA Investment Holding Co, a subsidiary of the Tianjin City
Government. Tifen’s development projects are mostly located in Tianjin, but it also has projects outside
Tianjin such as in Haikou in Hainan Island. The equity in Tifen was disposed of in March 2016.

In 2007 the Group, the Crosby Group and HSBC jointly established Fund I (originally known as the
HSBC NF China Real Estate Fund, L.P. and known as at the date of this Offering Circular as InfraRed NF
China Real Estate Fund, L.P.), a US$710 million fund (of which US$510 million was raised from the
market) with an investment focus on Chinese real estate. The Group has a 25 per cent. economic interest
in the general partner which manages Fund I and invested US$50 million in the fund. NFCI and InfraRed
established Fund II as a follow-on fund to Fund I.

In 2010, the Group became the second largest shareholder of Sino-Ocean Land Holdings Limited
(“SOL”). On 22 November 2013, the Group’s interest in SOL increased from 14.05 per cent. to 19.14 per
cent. In December 2015, the Group disposed of its shareholding in SOL.

In 2012, the Group issued its inaugural tranche of guaranteed notes of US$600 million. Such guaranteed
notes obtained an investment grade rating from S&P Global Ratings, Moody’s and Fitch Ratings. In
January 2017, the Group repaid such guaranteed notes with a principal amount of US$600 million in full.

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On 28 August 2013, the Guarantor’s wholly owned subsidiary, New Precise Holdings Limited, acquired
29.98 per cent. of the units in Forterra Trust for approximately SGD 226.7 million. Lucky Token
Investments Limited, another wholly-owned subsidiary of the Guarantor, acquired 100 per cent. of the
equity in Oriental Management Services Limited, a holding company which owns 100 per cent. of the
trustee manager and property manager of Forterra Trust, for approximately €17.5 million. On 13
February 2015, the Group completed the privatisation and delisting of Forterra Trust from the Singapore
Exchange Securities Trading Limited. Subsequent to the delisting and privatisation, Forterra Trust
became a wholly owned subsidiary of the Group. For further details, please refer to “Investment
properties in the PRC” below.

In March 2015, the Group acquired a property in the United Kingdom, 16 Old Bailey, London, for
investment purposes. This is a co-investment with Crosby Group and the Group holds an 80 per cent.
equity interest.

On 29 May 2017, the Group issued its inaugural tranche of perpetual capital securities in the amount of
US$500 million with a distribution rate of 5.5 per cent. and with an investment grade rating by Moody’s.
The perpetual capital securities are classified as equity of the Group in accordance with IFRS.

On 31 May 2017, the Group won the tender for a commercial site at the former Kai Tak airport from the
Lands Department for HK$24.6 billion. The site, which is located at the heart of the Kai Tak-Kowloon
East central business district, is intended to be developed into an integrated, mixed-use commercial
project, comprising of Grade A offices and a retail complex.

In March 2018, the Group acquired Regent Quarter, King’s Cross in London.

Awards

As a well-established property developer, Nan Fung Group has garnered numerous awards. Each award is
recognition of the Group’s continuous efforts to improve and contribute to the local communities it works
with for their present and future prosperity. Below are some selected awards that the Group has garnered
since 2015:

2020 . . . . . . . . . . . . . . . . . . . . . . . Airside, Kai Tak was awarded the HK Green Building Council —
BEAM Plus New Building v1.2 — Provisional Platinum (2020)

2016, 2017, 2018 and 2019 . . . . . . Top 10 Developers by BCI Asia

2018 . . . . . . . . . . . . . . . . . . . . . . . The Mills, Tsuen Wan achieved LEED Gold Final Certification in
Core and Shell Development

2017 . . . . . . . . . . . . . . . . . . . . . . . The Quayside, Kwun Tong was awarded the Gold Winner for Best
Futura Project at the MIPIM Asia Summit

2015 . . . . . . . . . . . . . . . . . . . . . . . The Visionary, Tung Chung was awarded the “Best Property
Project” in “Best of the Best Awards 2015”

Reorganisation

Prior to 30 September 2011, the entities in the Group were held by Dr. Chen through his 100 per cent.
direct interest in Chen’s Holdings Limited (now known as Nan Fung Group Holdings Limited, a company
incorporated in the British Virgin Islands and primarily undertaking property development and
investment business in Hong Kong), Sheng Fung Company Limited (now known as Nan Fung Property
Holdings Limited, a company incorporated in Hong Kong and carrying on property development and
investment business in the PRC and Gavast Estates Limited (a company incorporated in Hong Kong,
undertaking financial investment management business), and other smaller entities.

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On 30 September 2011, the Group completed the Reorganisation, under which the operating companies
of the Group were consolidated under Chen’s Holdings Limited (as set out above). The Guarantor was
incorporated to serve as the direct holding company of Chen’s Holdings Limited. Chen’s Holdings
Limited has since changed its name to Nan Fung Group Holdings Limited (“NFGHL”) with effect from
25 July 2012. A second company, Chen’s Group International Limited, was incorporated in the British
Virgin Islands to hold 100 per cent. of the shares in the Guarantor, with the shares in Chen’s Group
International Limited being beneficially owned by Dr. Chen. The Reorganisation has allowed the Group
to streamline its decision-making process, with decisions on behalf of the Group being made centrally at
the level of NFGHL.

Chen’s Group International Limited incorporated another company, Chen’s Group Holdings Limited, in
the British Virgin Islands to hold 100 per cent. of the shares in the Guarantor with effect from 10
November 2014.

Strategy

The Group’s overall strategic aim is to be a preeminent real estate developer that provides premium
property services and products, with a focus on excellence in quality and design, compliance with
statutory and functional requirements and customer satisfaction, whilst delivering projects development
and management services in a reliable, efficient and environmentally responsible project manner. The
Group’s core values are: Quality, Value, Innovation and Services. The Group seeks to achieve this
objective through the following strategies:

Focus on the premium property development segment in Hong Kong and strategic geographic portfolio
diversification

The Group intends to maintain and leverage on its position as a comprehensive and established premium
property developer in the Hong Kong market, with a focus on luxury residential development, by
strategically building its land bank through acquisitions, promoting its brand, and continuing to focus on
high quality customer service and maximise cost efficiencies through its vertically integrated business
model. The Group also intends to continue to strengthen its relationships with various business partners
and identify and collaborate with strategic partners.

In addition, the Group intends to continue to increase its presence in jurisdictions outside of Hong Kong,
particularly in the PRC and overseas, over the medium to long-term to achieve a more balanced split
between Hong Kong, the PRC and overseas based investment and development portfolio, which will
diversify the geographical concentration of the Group’s business in Hong Kong and to capture the growth
potential in the PRC and overseas. This may involve direct development opportunities in the cities in
which the Group currently has operations, such as Shanghai and Guangzhou, or considering joint
ventures with, or the acquisition of, local developers in other cities and areas. Entering into joint ventures
with local developers allows the Group to leverage off local knowledge and experience, and to reduce
risk. The Group believes that its investment in Fund I has also provided it with the opportunity to increase
its goodwill, reputation and experience in the PRC market, and that its investment in Fund II will continue
to expand on this opportunity. The Group also aims to use this investment to enhance market confidence
in its capabilities as an integrated property developer in the PRC. Over the long-term, the Group intends
to build up a portfolio of commercial properties in first-tier cities in the PRC in order to generate stable
recurring income.

Through these efforts, the Group believes it can take advantage of growth opportunities in Hong Kong,
the PRC and overseas to further broaden its revenue base.

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Disciplined and prudent approach in growth and management of land bank

The Group intends to continue to acquire new land bank and properties in a cost conscious and prudent
manner to enhance the profitability of its development projects. In Hong Kong, the Group continuously
monitors and seeks out sources to grow its land bank, such as public auctions and tenders, tendering for
development projects offered by the Urban Renewal Authority (“URA”) and the MTR Corporation
(“MTR”), private land sales, acquisitions of old buildings for redevelopment purposes, and acquisitions
of other property development companies. The Group has a dedicated team for this purpose. The Group
also possesses the capability to acquire urban sites through the assembly of fragmented titles in existing
old buildings. When a potential site is identified, the Group carries out detailed feasibility studies to
assess risk and profitability. This has allowed the Group to minimise the costs at which it acquires
properties while ensuring that its land bank is maintained at a sufficient volume to support the Group’s
development activities. The Group may also seek to minimise its exposure to any single property
development project by entering into joint ventures with other major property developers.

Enhance the Group’s brand recognition by leveraging value-added products and services

The Group intends to continue to enhance the “Nan Fung” brand by delivering high quality products and
maintaining its high standard of after-sales and property management services. The Group regards
property management as an integral part of its business and intends to leverage property management to
enhance the reputation and brand recognition of the Group. The Group aims to achieve this through sound
and proactive management of both Group and third party properties. The Group is also developing the
“D’Home” brand for use with luxury furnished apartments held for leasing with customised services, to
increase its presence in the high-end property market. The “D’Home” brand has been established with an
emphasis on comfort, quality, and versatility to meet the requirements of the luxury market.

Focus on maintaining stable cash flows to offset cyclicality of property development business

The Group intends to maintain an appropriate investment and rental property portfolio mix in Hong Kong,
the PRC and the United Kingdom which will enhance its recurring income stream, by retaining for
leasing purposes a number of developed properties that are either centrally located or are otherwise in
areas of relative scarcity and high demand such as the Mid-Levels or the South side of Hong Kong Island,
and aims to continue to grow its portfolio in these areas. The Group may also acquire existing properties
with turnaround plans via alteration and addition for release in particular niche markets when such
opportunities become available. The Group holds an exhibition centre in Guangzhou and two hotels, one
in Hong Kong and one in Guangzhou, all of which have helped to add to the Group’s ongoing recurring
income. The Group’s sales or investment strategy, to focus on short-term profit or long-term assets value,
is periodically reviewed to align with the Group’s financial objectives and the market outlook. The
completed properties for investment of the Group in Hong Kong amounted to approximately 2.3 million
sq.ft. in total attributable GFA as at 31 March 2020. This business segment continues to be a key source
of recurring stable income for the Group. The Group also intends to add new investment properties in
prime locations, while maximising the occupancy levels and efficiency of its rental portfolio. The Group
expects that the rental income from the investment and rental property portfolio will continue to provide
a stable and recurring income base to the Group.

Maintain financial prudence through active management of a liquid financial investment portfolio

The Group has maintained a financial investment portfolio, which consists of liquid investments
diversified across various asset classes. The Group’s strategy involves investing globally in assets and
strategic investments that offer reasonable valuation with solid long-term underlying businesses and good
long-term potential. The Group aims at searching for investment opportunities that have an intrinsic value
higher than their trading prices, see “Description of the Group — Financial Investment.”

106
Competitive Strengths

The Group believes it has the following competitive strengths:

Proven track record of successfully identifying, acquiring quality land bank and developing prime sites

The Group has consistently been able to identify, acquire and develop prime sites for both city-core
commercial developments and integrated residential communities. Many of the Group’s commercial
development projects are either within urban areas or along transportation hubs in new towns, and many
of its residential properties are located near public transportation hubs. The Group believes that its track
record of securing and developing conveniently located prime sites is largely attributable to the extensive
market research that the Group conducts and its management team’s valuable experience and capabilities.
Through this process, the Group believes it gains important insights into the particular land parcels in
which it is interested and the development plans of the relevant authorities.

The Group believes this increases its chances of successfully obtaining the land in the subsequent auction
or tender process. The Group also possesses the capability to acquire urban sites through the assembly of
fragmented titles of existing old buildings. This is evidenced by the Group’s acquisition of all 100
fragmented titles of an old residential building in Chai Wan within a year, which is a record in the
industry.

The Group has a strategic, quality land bank which it believes includes attractive development locations.
The Group acquires land for future development in areas where it believes the land will appreciate in
value, such as developing urban areas and other areas with substantial government investment in
infrastructure support. Through developments such as the Airside, Kai Tak in East Kowloon (an
integrated commercial project comprising mostly Grade A offices with retail component) and The
Quayside in Kwun Tong (a Grade A commercial building under development along the Kowloon East
Central Business District Harbourfront), the Group believes it has positioned itself to benefit from the
Hong Kong government’s plan to develop the East Kowloon Kai Tak area as an additional commercial
central area of Hong Kong and cruise terminal, and hence benefit from the continued growth of Hong
Kong as an international financial and offshore Renminbi centre and tourist centre.

The Group believes that its knowledge of the property development business cycle and its connections in
the market in Hong Kong provides it with opportunities to acquire quality sites during a market downturn.
Due to the expertise of its management team, the Group believes it has been able to acquire much of its
land bank at reasonable prices.

Ability to compete effectively

The Group competes with other property developers in Hong Kong and in the PRC for the acquisition of
suitable development sites and available investment properties. Although the Group has a number of
strategic joint venture arrangements with certain of its competitors, such arrangements are typically
project-based only and do not restrict them from competing on other project developments. Nan Fung
believes that its extensive cumulative experience in property investment, development, leasing and
management enables it to compete effectively with its competitors. Furthermore, Nan Fung believes that
its strategy of assessing cost against expected yield, the development of working relationships with local
governments and industry participants, its continuous focus on the development of quality properties and
the provision of premium customer service will continue to enable it to maintain its reputation as a
developer and landlord of quality properties.

Integrated business model

The Group operates a comprehensive vertically integrated property business and maintains an in-house
property development team of professionals including registered architects, professional planners, urban
designers, professional engineers, interior designers, chartered builders and surveyors. This allows the
Group to oversee and largely perform all aspects of its development operations, including the selection
and purchase of sites, the preparation of feasibility studies, the obtaining of government approvals for

107
zoning and modifications, the design and management of development projects, the marketing, leasing
and management of completed projects, and property financing. This also provides the Group with
flexibility to control the timing of capital expenditure at different points of market cycles, and to control
quality while minimising costs.

Stable and recurring income base from its financial investment portfolio, property rentals and property
management

The Group maintains a substantial financial investment portfolio. The primary goal of this strategy is to
maintain liquidity and generate stable dividend and interest income (see “Description of the Group —
Financial investment” below), with dividend income from investments and interest income from debt and
convertible securities amounting to HK$1,412 million for the year ended 31 March 2020 (HK$687
million for the year ended 31 March 2019). The Group has a portfolio of quality investment and rental
properties with a stable and recurring income base providing gross rental income of HK$1,561 million for
the year ended 31 March 2020 (HK$1,537 million for the year ended 31 March 2019). Attributable rental
income from joint venture rental projects amounted to HK$324 million for the year ended 31 March 2020
(HK$242 million for the year ended 31 March 2019). The Group also manages 79 properties with a total
GFA of 28 million sq.ft. as of 31 March 2020 (82 properties with a total GFA of 29 million sq.ft. as of 31
March 2019), which provides a stable recurring property management fee income of HK$289 million for
the year ended 31 March 2020 (HK$283 million for the year ended 31 March 2019) (see note 6 to the
Guarantor’s audited consolidated financial statements for the year ended 31 March 2020 set out herein for
further details). Other than the aforementioned, the Group’s joint-venture rental projects also provide it
with stable and recurring income. This stable recurring income base reduces the potential volatility in the
Group’s financial results which are associated with property development, whilst providing a liquidity
buffer to reduce the effect of financial downturns and other adverse events on the Group’s operations (as
described below). The Group usually has approximately one-third of its tenancy agreements up for
renewal each year and this has helped the Group to avoid the concentration of rent renewal dates during
any one particular period of a financial year, whilst also providing the Group with opportunities to adjust
rentals to reflect prevailing market rates. As a result, property rentals have shown resilience through
downturns, complementing the recurring cash flow streams from net rental income and property
management.

Substantial liquidity buffer

The Group’s stable recurring income base, and in particular its financial investment portfolio, provides a
substantial liquidity buffer to the Group and allows it to maintain strong cash flows despite adverse
economic events such as the Asian financial crisis in 1997, the SARS outbreak in 2003 and the global
credit and financial crisis in 2008. The availability of a consistent and diversified cash flow stream allows
the Group to weather the cyclicality of the Group’s property development business, and take advantage of
new opportunities even in market downturns. The Group also has the benefit of a material liquidity buffer
from its undrawn banking facilities. As at 31 March 2020, the Group had total undrawn banking facilities
amounting to HK$19,381 million (HK$17,954 million as at 31 March 2019).

Strategic partnerships with property market players

The Group has entered into strategic partnerships and joint ventures with established property developers
in Hong Kong and the PRC. In Hong Kong, the Group has existing or completed joint ventures with
Wheelock, Cheung Kong, Wing Tai, Sino Land, K.Wah, Henderson Land, Sun Hung Kai Properties, HKR
International and LINK REIT. In the PRC, the Group’s strategic partners include Shanghai Industrial
Urban Development Group Limited, a Hong Kong listed company (stock code 0563.hk), held by
Shanghai Industrial Holding Limited, a Hong Kong listed company (stock code 0363.hk).

The Group’s strategic partnerships and joint ventures with established property developers based in Hong
Kong and the PRC have enabled the Group and its partners to acquire projects at a reasonable cost with
reduced financial risk, to capture successfully new business opportunities in new markets and to enhance
its ability to develop commercial and investment properties. The Group has capitalised on synergies by
working closely together with its strategic partners.

108
Strong corporate governance and internal controls

The Group is committed to maintaining good standards of corporate governance and has its own code
which provides the framework for its corporate governance policies and practices. This includes internal
controls to manage the risk of conflicts and to review potential substantial transactions. The Group also
has in place an enterprise risk management framework and internal controls to identify and mitigate
significant business risks.

Experienced and stable management team

The Group has dedicated and experienced senior management who have achieved a consistent track
record of success in the real estate and financial investment sectors in Hong Kong and are building a
strong reputation in the PRC. The management team has a detailed understanding of the real estate
markets in both Hong Kong and the PRC, and the majority of the Group’s senior management team have
over 20 years of experience in their fields. Their in-depth knowledge of the markets means that Nan Fung
is able to identify market trends and formulate strategies which are in the best interests of the Group.

Strong customer focus and reputable brand name

The Group believes that the success of its projects has been largely due to its ability to interpret and
respond to customers’ tastes and preferences. The Group’s focus on customer satisfaction begins with its
market research team, which works closely with its experienced senior management to study the potential
of individual sites the Group seeks to acquire, and their ultimate appeal and value to prospective buyers.
During the design phase, the Group’s project management team works closely with its market research
and sales teams to identify the key features that customers desire and incorporates them into the design.

The Group’s customer-centric culture is further evidenced by its emphasis on delivering a quality
product. This is achieved through the Group’s own engineering and project management teams, allowing
the Group to maintain close supervision and control to ensure quality construction. At project
completion, the Group conducts its own quality checks in addition to the mandatory inspections by
government agencies.

Furthermore, the Group’s attention to detail and customer satisfaction extends beyond the completion of
its projects through its comprehensive after-sales and property management services. The Group believes
its customer-oriented culture has made its residential property sales popular in the market.

The Group believes that its customer focus and quality products have also enabled it to build “Nan Fung”
into a reputable and well-recognised brand in Hong Kong and other areas where it has operations.

Conservative capital structure and diversified sources of funding

The Group adopts a conservative approach to financing which allows the Group to adopt a prudent
approach to property development. As at 31 March 2020, the Group had a net debt to owners’ equity ratio
of 15.8 per cent. This provides the Group with the flexibility to wait for optimal conditions to commence
development or to sell properties, allowing it to maximise the price obtained on sales and to stagger its
developments over property cycles. In addition, with its strong financial and credit profile, Nan Fung has
been able to obtain bank loan financing at terms which are in line with those offered to other large
developers in Hong Kong. Nan Fung has expanded its exposure to external funding, allowing it to
diversify its funding sources and lengthen its maturity profile. These factors enable Nan Fung to maintain
what it believes is a strong balance sheet with a high and increasing level of liquidity.

Recent Development

Based on the information available to the Group, as a result of the ongoing COVID-19 situation and
market conditions, since 31 March 2020 there have been a lower contribution from property sales revenue
and hotel revenue as compared to the same period in 2019, which are partially offset by the increase in the
Group’s income from its financial investment. Subject to market conditions and if the foregoing
circumstances relating to the Group’s financial performance continue into the second half of 2020, there
could be a material reduction to the Group’s profit for the six months ending 30 September 2020, as
compared to the same period in 2019.

109
Business

The following sets forth an overview of the Group’s organisational structure showing its principal
functional units and business activities as at the date of this Offering Circular:

Business Structure

Dr Chen’s
estate(1)

100%

Chen’s Group
International Limited
(BVI)

100%

Chen’s Group
(3)
Holdings Limited
(BVI)

100%

Nan Fung International

Holdings Ltd.
(BVI)
100%

Nan Fung Group

(2)
Holdings Limited
(BVI)

100%

Property Business: Financial Other

Development Properties Investment Businesses(4)
& Investment Properties Portfolio
- Hong Kong
- PRC
- Overseas

Notes:
(1) For information regarding the ownership of Nan Fung as at the date of this Offering Circular, see “Shareholders, Directors’
Interests and Related Party Transactions”.
(2) Nan Fung Group Holdings Limited was known as Chen’s Holdings Limited prior to 25 July 2012.
(3) Chen’s Group Holdings Limited was incorporated on 29 August 2014.
(4) Other businesses include hospitality, construction business, property management, warehouse business and life sciences
investments.

110
The following tables set forth the revenues and results for the business segments of the Group for the
years indicated:

For the year ended 31 March

2020 2019
(HK$ million)
Property Business — Hong Kong
— Revenue . . . . . . . . . . . . . . . . . . . . . . ................ 3,285 11,440
— Results (1) . . . . . . . . . . . . . . . . . . . . . ................ 257 3,446
Property Business — PRC and overseas
— Revenue . . . . . . . . . . . . . . . . . . . . . . ................ 1,292 1,405
— Results (1) . . . . . . . . . . . . . . . . . . . . . ................ 268 1,046
Financial Investment
— Revenue . . . . . . . . . . . . . . . . . . . . . . ................ 1,412 687
— Results (1) . . . . . . . . . . . . . . . . . . . . . ................ 916 189
Corporate, treasury and other operations
— Revenue . . . . . . . . . . . . . . . . . . . . . . ................ — —
— Results (1) . . . . . . . . . . . . . . . . . . . . . ................ (29) (36)
Total (after inter-segment elimination)
— Revenue . . . . . . . . . . . . . . . . . . . . . . ................ 5,989 13,532
— Results (1) . . . . . . . . . . . . . . . . . . . . . ................ 1,412 4,645

Note:
(1) Before finance income & expenses, and taxation.

The following table sets forth the Group’s share of results of its associated companies (those over which
the Group may exert influence through representations on the board of directors of such companies) and
joint ventures (those over which the Group exercises joint control along with its partners pursuant to
contractual arrangements), by business segments for the years indicated:

For the year ended 31 March

2020 2019
(HK$ million)
Share of results of joint ventures . . . . . . . . . . . . . . . . . . . . . . . . 422 1,517
— HK Properties . . . ....... . . . . . . . . . . . . . . . . . . . . . . . . 689 2,042
— PRC Properties . . ....... . . . . . . . . . . . . . . . . . . . . . . . . (267) (522)
— Others . . . . . . . . ....... . . . . . . . . . . . . . . . . . . . . . . . . — (3)
Share of results of associates . . . . . . . . . . . . . . . . . . . . . . . . . . . (16) 513
— HK Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (166) 431
— PRC Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 100
— Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13) (18)

111
Property Development and Investment

Hong Kong and Macau

Properties For Sale (“PFS”)

The Group’s core business is the development and sale in Hong Kong of residential and commercial
properties, including retail and office space, along with a small number of industrial properties. The
Group is an established property developer in the Hong Kong market, with a track record of 175 projects
since 1965.

The Group operates a comprehensive, vertically integrated, property business, which covers all principal
stages from acquisition (which may include land use conversion), through to marketing and property
management, with or through its various subsidiaries and affiliates, helping the Group to control costs,
quality and scheduling. The Group is able to oversee and largely perform all aspects of its development
operations, including the selection and purchase of sites, the preparation of feasibility studies, the
obtaining of government approvals for zoning and modifications, the design and management of
development projects, the marketing, leasing and management of completed projects, and mortgage
financing.

As at 31 March 2020, the Group had a land bank available for development of approximately 393,000
sq.ft. in Hong Kong and PFS with an attributable GFA of approximately 2.3 million sq.ft. in Hong Kong
and Macau. Sales of property in Hong Kong historically have been a significant source of the Group’s
operating profits.

For the years ended 31 March 2020 and 2019, the Group’s revenue from sales of properties was HK$2,219
million and HK$10,451 million, respectively. Revenue from sales of properties under joint-venture
projects amounted to HK$1,687 million and HK$4,730 million for the years ended 31 March 2020 and
2019 respectively.

For the year ended 31 March 2020, attributable contracted sales achieved by the Group in Hong Kong and
Macau was approximately HK$6.9 billion.

The typical development cycle for vacant land in Hong Kong from acquisition of the site and preparation
of architectural plans to expected completion date is approximately three to five years. However, if there
is a variance of land usage required, the process may take longer and may involve the payment to the
government of substantial land premiums in connection with the modification of the land use restrictions.
The development cycle for urban property may also be longer, since such sites generally are not vacant
and frequently contiguous multiple sites or separate units within a site must be assembled before
development can begin.

In general, the Group’s practice is to pre-sell its developments before completion and the granting of
occupation permits by government authorities in order to improve liquidity and reduce market risk.
Revenues and profits from such sales are only recognised on the transfer of risks and ownership. Deposits
and instalments received on properties sold prior to their completion are included in current liabilities.

112
The table below sets out the Group’s major PFS projects in Hong Kong and Macau as at 31 March 2020:

Expected
Completion
Group’s Approximate Date/
Approximate Approximate Land use equity Attributable Completion
Project name and location Site area GFA purpose interest GFA Date
(sq.ft.) (sq.ft.) (%) (sq.ft.)
COMPLETED
1 Mount Nicholson, 251,000 83,000 Residential 50 41,000 September
Mount Nicholson Road, 2016
The Peak . . . . . . . . . .
2 La Cresta, Kau To . . . . 64,000 18,000 Residential 50 9,000 December
2017
3 One Oasis . . . . . . . . . . 365,000 478,000 (1) Residential 17 81,000 2015
4 Island Garden, 57,000 22,000 Residential 100 22,000 February
Shau Kei Wan. . . . . . . . 2019
5 Ori, Tuen Mun . . . . . . . 33,000 33,000 Commercial 75 25,000 December
2018
6 Deep Water Bay Drive, 110,000 116,000 Residential 85 99,000 July 2018
Shouson Hill . . . . . . . .
7 Others . . . . . . . . . . . . N/A 11,000 (1) N/A N/A 2,000 N/A
Sub-total . . . . . . . . . . . . . . 279,000

UNDER DEVELOPMENT
1 LP6, Tseung Kwan O . . 147,000 1,474,000 Residential 60 885,000 2020
2 LOHAS Park (Package 86,000 812,000 Residential 100 812,000 2022
10), Tseung Kwan O. . .
3 One Oasis, Macau . . . . 195,000 1,259,000 (1) Residential 17 214,000 2020
4 Chai Wan Project . . . . . 11,000 151,000 Industrial 50 76,000 2024
Sub-total . . . . . . . . . . . . . . 1,987,000
Total . . . . . . . . . . . . . . . . 2,266,000

Note:
(1) Representing saleable floor area (SFA).

Set forth below is a brief description of selected PFS projects:

Mount Nicholson, The Peak

In July 2010, a joint venture between the Group and the Wheelock group acquired a site at Mount
Nicholson in a government auction for HK$10.4 billion. The site is a rare large-scale residential site in
the upmarket Peak area overlooking the Victoria Harbour, Happy Valley and Wanchai. The Group
developed the site into 48 high-end apartment units and 19 houses. The Group holds a 50 per cent. interest
in the project and the project was completed in September 2016.

Island Garden, Shau Kei Wan

In 2011, the Group acquired 100 per cent. interest of the Island Gardens, a residential building of ex-Civil
Servants’ Cooperative Building Societies, for redevelopment purpose. In July 2015, the Group agreed to
a lease modification for GFA relaxation with the HKSAR Government at a land premium of
approximately HK$3 billion. The site area is approximately 57,000 sq.ft. and the total GFA is
approximately 458,000 sq.ft. after the GFA relaxation. It was developed into 470 residential units and
completed in February 2019.

113
La Cresta, Kau To

On 1 August 2013, the Group won a tender for a parcel of land at Sha Tin Town Lot No. 563, Area 56A,
Kau To, Sha Tin, jointly with HKR International Limited through a 50:50 joint venture company at a
consideration of HK$1,220 million. The parcel of land has an aggregate site area of 64,000 sq.ft. and an
anticipated GFA of approximately 134,000 sq.ft. The site comprised of 48 high-end apartment units and
13 houses which was completed in December 2017.

LP6, Tseung Kwan O

On 20 January 2015, the Group won the tender to develop MTR Corporation’s LOHAS Park Package Six
residential project in Tseung Kwan O with a 60 per cent. equity. SOL holds the remaining 40 per cent.
equity interest. Total land premium was HK$3,345 million and the development will produce 2,392 units
with total GFA of approximately 1,474,000 sq.ft. Completion is expected in 2020.

LOHAS Park (Package 10) Project

On 9 March 2016, the Group won the tender to develop MTR Corporation’s LOHAS Park Package Ten
residential project in Tseung Kwan O with a total land premium of HK$1,659 million. The development
will have up to 893 units with total GFA of approximately 812,000 sq.ft. Completion is expected in 2022.

8 Deep Water Bay Drive, Shouson Hill

On 30 May 2012, the Group won a government tender for a parcel of land at No. 8-12, Deep Water Bay
Drive (RBL 1190), Shouson Hill, Hong Kong at a consideration of HK$6 billion. The Group holds an 85
per cent. interest in the project and develop the site into 52 high-end apartment units and two deluxe
houses, among which six special units are intended to be held for investment purposes. The development
was completed in July 2018.

Land bank in Hong Kong

As at 31 March 2020, the Group had a land bank in Hong Kong of approximately 393,000 sq.ft. available
for development.

The Group believes that, by means of a combination of existing methods of replenishing the land bank
such as public auctions and tenders, tendering for development projects offered by URA and MTR and
private land sales and the acquisition of development land in the secondary market, the Group’s land bank
will continue to be sufficient to satisfy its development plans in Hong Kong.

114
Investment Properties

The investment properties of the Group in Hong Kong and Macau amounted to approximately 4.2 million
sq.ft. in total attributable GFA as at 31 March 2020. The Group’s revenue for the years ended 31 March
2020 and 2019 from gross rental income from its investment properties and other properties amounted to
HK$1,561 million and HK$1,537 million, respectively, comprising 26 per cent. and 11 per cent. of the
Group’s revenue, respectively. Rental income represents the aggregate rental received from the Group’s
investment properties and properties for sale. Most of the completed investment properties are managed
by the property management arm of the Group: Hon Hing Enterprises Limited, Main Shine Development
Limited, Vineberg Property Management Limited and New Charm Management Limited.

The completed investment properties consist mainly of residential properties, office, commercial and
hotel buildings. The leases the Group has granted are typically for two to three years for office tenants
occupying relatively small commercial floor space and longer lease periods of up to ten years for those
tenants occupying commercial and relatively large office floor space. The Group does not have any firm
policy or practice in relation to rent reviews or adjustments, preferring to be flexible on such matters after
assessing market demand and supply conditions for the relevant property.

In accordance with IFRS, the Group values its investment properties at every reporting balance sheet date
at their fair market value based on an independent professional valuation. Any change in the valuation is
charged or credited, as the case may be, to the consolidated income statement. The Group’s financial
performance is therefore subject to fluctuation from period to period in light of the movements in
property value in Hong Kong, which has been cyclical in the past and could result in a significant
accounting profit or loss for the Group.

The Group’s rents are generally quoted in square feet per lettable area or gross area. In most cases, the
rents quoted by the Group do not include property management charges and government rates payable by
its tenants.

The Group’s major completed investment properties in Hong Kong have recorded an overall occupancy
rate of approximately 90 per cent. (1) as at 31 March 2020.

The following table shows the Group’s attributable holdings of major investment properties, completed
and under development, in Hong Kong as at 31 March 2020:

Attributable GFA Carrying Value

(%) (%)
Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 10
Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 51
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 36
Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2
Industrial & Godown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 —
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1
100 100

Note:
(1) The overall occupancy rate of major investment properties has not included those of commercial portions with less than 50
per cent. ownership.

115
The following table shows the Group’s major investment properties in Hong Kong as at 31 March 2020:

Approximate
Approximate Group’s Attributable
Project name and location Purpose Government Lease term GFA interest GFA
(sq.ft.) (%) (sq.ft.)
COMPLETED
1 Nan Fung Tower, Central (1) . . . . . . Office 999 years from 230,000 100 230,000
29/06-14/10/1903
2 Nan Fung Tower, Central (1) . . . . . . Commercial 29/06-14/10/1903 66,000 100 66,000
3 33-49 Des Voeux Road West, Sai Office & 999 years from 144,000 100 144,000
Ying Pun . . . . . . . . . . . . . . . . . Commercial 29/09/1900
4 The Quayside . . . . . . . . . . . . . . Office & 50 years from 899,000 40 360,000
Commercial 23/02/2015
5 Tseung Kwan O Plaza . . . . . . . . . Commercial From 21/03/1997 to 376,000 100 376,000
30/06/2047
6 Ma On Shan Centre . . . . . . . . . . . Commercial From 24/05/1991 to 96,000 100 96,000
30/06/2047
7 Richwood Park, Tai Po . . . . . . . . . Commercial From 18/05/1992 to 16,000 50 8,000
30/06/2047
8 The Mills . . . . . . . . . . . . . . . . . Others (4) From 10/07/1993 to 258,000 100 258,000
30/06/2047
9 Courtyard by Marriott Hong Kong Hotel From 17/04/1997 to 326,000 100 326,000
Sha Tin — Hotel Portion (2) . . . . . . 30/06/2047
10 Courtyard by Marriott Hong Kong Commercial From 17/04/1997 to 24,000 100 24,000
Sha Tin — Commercial Portion (2) . . 30/06/2047
11 Deep Water Bay Drive, Shouson Hill Residential 50 years from 85,000 85 72,000
03/07/2012
12 80 Robinson Road, Mid-Levels (1) . . Residential 999 years from 43,000 100 43,000
25/06/1859
13 Fortuna Court, Repulse Bay (1) . . . . Residential 75 years, renewable 31,000 100 31,000
for 22/11/193775
years from
14 Grand Garden, South Bay . . . . . . . Residential 75 years, renewable 40,000 100 40,000
for 08/06/198275
years from
15 Queen’s Cube, Wanchai . . . . . . . . Residential & 50 years from 45,000 100 45,000
Commercial 20/04/2007
16 Cheung Fung Industrial Building, Industrial 99 years from 28,000 100 28,000
Tsuen Wan . . . . . . . . . . . . . . . . 01/07/1898 (3)
17 Well Fung Industrial Building, Industrial 99 years from 7,000 100 7,000
Kwai Chung (1) . . . . . . . . . . . . . . 01/07/1898 (3)
18 Others . . . . . . . . . . . . . . . . . . . N/A N/A 497,000 N/A 163,000
Sub-total . . . . . . . . . . . . . . . . . . . . . 2,317,000

116
 Approximate
Approximate Group’s Attributable
Project name and location Purpose Government Lease term GFA interest GFA
(sq.ft.) (%) (sq.ft.)
UNDER DEVELOPMENT
1 Airside, Kai Tak . . . . . . . . . . . . . Office, 50 years from 1,911,000 100 1,911,000
Commercial 28/06/2017
& Others
Sub-total . . . . . . . . . . . . . . . . . . . . . 1,911,000
Total . . . . . . . . . . . . . . . . . . . . . . . 4,228,000

Notes:
(1) The property is classified as PFS under existing accounting treatment.
(2) The property is classified as property, plant and equipment under existing accounting treatment.
(3) The lease term had been automatically extended for a further term of 50 years to 30 June 2047 pursuant to the New Territories
Leases (Extension) Ordinance.
(4) The intended purpose is for development of an incubation centre and for commercial use.

Selected investment properties projects in Hong Kong

Nan Fung Tower

Nan Fung Tower is located in Des Voeux Road Central, Hong Kong Island, and is easily accessible by
established transport networks including MTR, ferry piers and the airport express railway. This Grade A
office building provides a flexible space system for office layout and subdivision, panoramic views of
Victoria Harbour and double glass windows to provide a quiet working environment. The tower also
includes a few floors of podium and basement for commercial use. Following a refurbishment that was
completed in 2015, the occupancy rate reached 99 per cent. as at 31 March 2020.

33-49 Des Voeux Road West

33-49 Des Voeux Road West is an iconic commercial complex situated in the heart of the Central and
Western District, one of the fastest-gentrifying areas in Hong Kong and with a high concentration of
galleries, cafes and boutique hotels. This area is well-served by a wide range of public transportation
including buses, minibuses, trams and taxis which are readily available along Des Voeux Road West, with
an MTR station only a few minutes’ walk away.

The property is a 27-storey commercial complex with retail, dining, entertainment, and office space, and
has a total GFA of 144,000 sq.ft. The occupancy rate was 100 per cent. as at 31 March 2020.

The Quayside

On 27 January 2015, the Group won a tender for a parcel of land at 77 Hoi Bun Road, Kowloon Bay
Action Area with a 40 per cent. equity interest. The Link Real Estate Investment Trust holds the
remaining 60 per cent. equity interest.

The Quayside is a new grade A office-cum-commercial development situated in the Kowloon Bay Action
Area with a total GFA of approximately 899,000 sq.ft. The occupancy rate was 78 per cent. as at 31 March
2020.

In line with the Government’s Energizing Kowloon East policy, this development endeavours to
contribute to building a sustainable community and to provide a balance between optimal user experience
and community engagement. Its harmonic design strives to encompass commercial prestige as well as
environmental consciousness. Input from the Group, designers, as well as members of the community
contributed to the integrated design approach that helps to achieve these goals.

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A key feature of the development is the public podium garden which provides a tranquil venue for
outdoor relaxation. A jogging track and facilities for stretching and exercising have been constructed,
thereby reinforcing the development’s role as an urban oasis and a community hub.

As a local pioneer in sustainability, the development has been pre-certified under the highest level of
world-wide renowned sustainable frameworks, including LEED-CS Pre-certification Platinum, BEAM
Plus Provisional Platinum and WELL-CS Pre-certification Gold. The WELL Building Standard is a
performance-based system for measuring, certifying and monitoring features of the built environment
that impact human health. The development’s environmental features result in low energy consumption
and low carbon emissions, thus ensuring the development’s long-term sustainability. These
environmental features include the use of sophisticated green technologies as well as passive design
strategies, such as landscaping and the use of shading devices to maximise views and natural light. The
development was awarded the MIPIM Asia Awards 2019 Best Green Development — Gold Winner.

The Mills

The Mills project transformed the Group’s former textile factory located in Chai Wan Kok, Tsuen Wan
into a new global destination which comprises of techstyle (intersection of textile and technology)
innovation, incubation, experimental retail, as well as textile-related art and culture. With the government
re-zoning of the area from industrial use to other uses, the development transformed three buildings of the
former Nan Fung Textiles into a single coherent complex with a museum-quality gallery, business
incubator, retail space and food and beverage space with a GFA totaling approximately 258,000 sq.ft. The
occupancy rate was 97 per cent. as at 31 March 2020. The project, in which the Group has 100 per cent.
equity interest, is in line with the Group’s focus on environmental sustainability and has achieved LEED
gold pre-certification in Core and Shell Development. Other sustainability measures include initiating
green leases for tenants, landscaping, energy reduction, rooftop farming and setting up an on-site food
decomposer.

The Group’s goal for The Mills is for it to become a platform for catalytic exchanges, so as to inspire and
grow a new generation of entrepreneurs. The Group hopes that companies and individuals which are
grateful for the opportunities that Hong Kong has offered to them can give back to the community by
re-investing in the creativity and entrepreneurial spirit of its people.

The development was awarded the RICS Awards Hong Kong 2019 Refurbishment/Revitalisation Team of
the Year (Winner), the Hong Kong Institute of Architect — Cross-Strait Architectural Design Award 2019
(Merit), Medal of the Year of Hong Kong 2019, and the Special Architectural Award — Heritage &
Adaptive Re-use 2019.

Tseung Kwan O Plaza Shopping Mall

As an integral part of the large scale residential project of Tseung Kwan O Plaza developed by the Group
in 2004, the shopping mall provides the Group with an attributable GFA of 376,000 sq.ft. of commercial
area and 301 car park spaces. Eight residential towers with 2,880 residential units sit above the shopping
mall, and the mall is centrally located among various residential estates in Tseung Kwan O, with direct
connection to the MTR station and a public transport interchange. Three phases of renovation were
completed at the end of 2015. The occupancy rate was 99 per cent. as at 31 March 2020.

Ma On Shan Centre

Ma On Shan Centre is a shopping and commercial centre with a GFA of 96,000 sq.ft. and 210 car parking
spaces. The centre is located next to the MTR station at Ma On Shan and is surrounded by numerous
residential estates. It also contains a number of education and recreation centres for children and
teenagers, catering for all daily necessities of the surrounding residents. The occupancy rate was 97 per
cent. as at 31 March 2020.

80 Robinson Road

80 Robinson Road was built in 2001 and is located in the Mid Levels, Hong Kong Island with easy access
to Central and Soho as well as a number of schools ranging from kindergarten to The University of Hong

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Kong. A number of the apartments have panoramic views of Victoria Harbour, and the building contains
two clubhouses for the use of residents, with facilities including a bowling alley, dance room,
gymnasium, squash court and an indoor thermostatic swimming pool with a jacuzzi. Typical apartments
range in size from approximately 865 sq.ft. to 2,356 sq.ft. (saleable floor area). Occupancy rate for the
Group’s units in 80 Robinson Road was approximately 94 per cent. as at 31 March 2020.

Airside, Kai Tak

On 31 May 2017, the Group won the tender for a commercial site at the former Kai Tak airport from the
Lands Department for HK$24.6 billion. The site is located close to a future MTR station, part of the
Shatin-Central Link which is scheduled to open by 2021. The site is expected to yield a total gross floor
area of 1.91 million sq.ft. The Group intends to develop an integrated commercial project on the site,
comprising mostly Grade A offices and a retail area. The project is expected to complete by 2022.

The development was recently awarded the International WELL Building Institute WELL Building
Standard — Multifamily Residential — Platinum Precertification (2019), as well as the HK Green
Building Council — BEAM Plus New Building v1.2 — Provisional Platinum (2020).

Other Furnished Residential Apartments under D’Home

The Group expanded its residential portfolio in 2011 with the addition of approximately 88 furnished
apartments in Queen’s Cube, Wanchai, Hong Kong Island.

The Group is also developing the “D’Home” brand for use with luxury furnished apartments held for
leasing with customised services. The “D’Home” brand has been established to focus on comfort, quality,
and versatility to meet the requirements of the luxury market, providing for short-term tenancies as well
as for furnished homes and optional amenity service. As at the date of this Offering Circular, the
“D’Home” branding is being applied to furnished apartments in Queen’s Cube and is to be extended to
furnished apartments in other properties situated in central locations in a select number of
neighbourhoods on the basis of market response. The occupancy rate of D’Home in Queen’s Cube was 57
per cent. as at 31 March 2020.

Hotel business in Hong Kong

The Group successfully completed its first hotel project, Courtyard by Marriott Hong Kong Sha Tin, in
2013. Courtyard by Marriott Hong Kong Sha Tin, with a GFA of 350,000 sq.ft., is a 524-room hotel at 1
On Ping Street, on the bank of the Shing Mun River in Sha Tin. The site is within walking distance of the
MTR Shek Mun Station, and is in close proximity by car to Tsim Sha Tsui. The hotel offers 5 room types,
ranging from standard rooms and executive suites, to deluxe suites, to cater for both travellers and
business patrons. The hotel also offers a wide range of facilities, including one of the largest banquet
ballrooms in Sha Tin, which will cater for approximately 430 people and will be available for use by both
private parties and business meetings, and a large outdoor landscaped deck with swimming pool. The
podium floors of the hotel house a variety of restaurants and shops, providing convenience to hotel
guests. The top floor was renovated to add a new bar/lounge and eight meeting rooms in July 2015 to the
existing executive lounge to provide premium services to hotel guests and business clients. The
development was awarded “Best New Hotel Construction and Design, Hong Kong” at the 2012
International Property Awards Asia Pacific in association with HSBC. It also achieved the Platinum
Rating of Final Assessment under the New Buildings (4/04 Version) of the HK-BEAM Society.

PRC

Since 2005 the Group has undertaken a prudent programme of expansion into the PRC. The Group’s plan
is to continue to increase its investment in the PRC gradually with the long-term goal of building a
commercial property portfolio comprising prime offices and retail space located in first-tier cities.

PFS in the PRC

As at 31 March 2020, the total attributable GFA of the Group’s PFS in the PRC amounted to 1,000 sq.m.,
consisting of one completed property project in Wuxi in the PRC.

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Investment properties in the PRC

The Group’s investment properties portfolio mainly consists of properties located in the first-tier cities of
Shanghai and Guangzhou. The Group completed The Place, Guangzhou, which is an office and
commercial complex with an attributable GFA of 75,000 sq.m. in 2012. In the second half of 2013, the
Group completed the Nan Fung International Convention and Exhibition Centre and Langham Place,
Guangzhou, an exhibition centre and hotel with an attributable GFA of 89,000 sq.m. In February 2015,
through the privatisation and delisting of Forterra, the Group consolidated and refurbished the properties
under Forterra, resulting in a sizable investment in Shanghai. The Group plans to retain these
developments for leasing purposes.

The Group expects its investment property portfolio will continue to generate a more meaningful
recurring income to the Group in the future, hence allowing the Group to benefit from the long-term
growth and rising affluence of the PRC. In July 2017, the Group acquired the remaining 40 per cent of
shareholding of WPP Campus and became the sole owner of the property. In May 2019, the Group has
successfully obtained a land parcel in Xianxia Road, Changning District, Shanghai. The Group intends to
continue to monitor the property market in the PRC and, if the Group considers conditions and
acquisition costs to be favourable, to expand its portfolio gradually over the years. The Group has sought
to identify premium commercial sites at an early stage, and also has the flexibility to consider acquiring
controlling interests in the commercial portion of joint venture projects from partners, hence allowing
acquisition to be made at a reasonable cost. By the time of completion of the existing projects under
development, the Group’s investment property portfolio in the PRC is expected to comprise Grade A
office properties, retail and commercial properties, convention and exhibition properties, hotels and car
park spaces held for long-term investment, amounting to approximately 691,000 sq.m. in attributable
GFA.

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The table below sets out the Group’s major investment properties projects in the PRC as at 31 March
2020:

Approximate
Approximate Group’s Attributable Expiry date of the land use
Project name and location Land use purpose GFA interest GFA term
(sq.m.) (%) (sq.m.)
COMPLETED
1 The Place, Shanghai . . . . . Office & 216,000 100 216,000 07/03/2043 (Phase 1)
Commercial 14/12/2065 (Phase 2)
27/03/2053 (Phase 3)
2 Shanghai Mart, Shanghai . . Office & 249,000 49 122,000 20/10/2049
Commercial
&
Exhibition (1)
3 WPP Campus, Shanghai . . Office & 73,000 (2) 100 73,000 28/04/2060
Commercial
4 Nan Fung Tower, Shanghai Office & 14,000 100 14,000 15/08/2054
Commercial
5 Nan Fung International Commercial, 89,000 100 89,000 17/12/2047
Convention and Exhibition Hotel &
Centre and Langham Place, Exhibition
Guangzhou . . . . . . . . . .
6 The Place, Guangzhou . . . Office & 75,000 100 75,000 Office: 18/11/2057
Commercial Commercial: 18/11/2047
7 Central Park Mall, Qingdao Commercial 43,000 55 24,000 02/04/2048
(Phase 1) . . . . . . . . . . .
8 Creativo, Tianjin Commercial 47,000 75 35,000 28/01/2053
(Phase 1) (4) . . . . . . . . . .
9 Le Rendez-vous, Commercial 11,000 75 11,000 24/07/2042
Shanghai (3) . . . . . . . . . .
Sub-total . . . . . . . . . . . . . . . 659,000
UNDER DEVELOPMENT . . . .
1 C8 Project, Shanghai . . . . Office & 54,000 60 32,000 29/12/2069
Commercial
Sub-total . . . . . . . . . . . . . . . 32,000
Total . . . . . . . . . . . . . . . . . . 691,000

Notes:
(1) The property use purpose is commercial but with a remark of exhibition on the remark page of the title certificate.
(2) The property’s GFA includes an above ground carpark.
(3) The property was formerly known as Huai Hai Mall.
(4) Creativo, Tianjin (Phase 1) was subsequently disposed in the second quarter of 2020.

The following table shows the Group’s attributable holdings of investment properties in the PRC as at 31
March 2020:

Attributable GFA Carrying Value

(%) (%)
Cities
Shanghai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 76
Guangzhou . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 21
Tianjin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1
Qingdao . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 100

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The following table shows the Group’s attributable holdings of investment properties in the PRC by use
as at 31 March 2020:

Attributable GFA
(%)
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Exhibition Centre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

Selected investment properties projects in the PRC

The Place, Shanghai

The Place is a large scale fully-integrated office/retail complex and a landmark development in the core
area of the “New Hongqiao — Tianshan Regional Business Centre”, one of the thirteen municipal-level
commercial centres in Shanghai. The Place is within 10 minutes’ walking distance of Line 2 metro
stations and 20 minutes driving distance of the Shanghai Hongqiao Airport and traffic hub. The Place
provides a fully integrated complex with three Grade A office towers and a shopping mall with a
pedestrian street.

As at 31 March 2020, the office area had a total GFA of 110,000 sq.m. and registered an occupancy rate
of 95 per cent., while the retail area had a total GFA of 106,000 sq.m. with an occupancy rate of 96 per
cent.

Shanghai Mart, Shanghai

Officially opened in 1999, Shanghai Mart was the first permanent international trade mart in the PRC. It
is the largest of its kind in Asia with a total aboveground GFA of 249,000 sq.m. The complex features a
combination of functions including office, commercial as well as trade and exhibition spaces. Shanghai
Mart is situated at No. 2299 Yannan Road (West), a prime location in the Shanghai Hong Qiao
Development Zone and a landmark in the Changning District. It is 20 minutes’ driving distance from the
Shanghai Hongqiao traffic hub and accessible by subway lines 2 and 10, as well as various bus lines. The
Group acquired the project in September 2014 through a joint venture with Shanghai Industrial Urban
Development Group Limited. As at the date of this Offering Circular, the Group held 49 per cent. equity
shares in the project. As at 31 March 2020, the office tower registered an occupancy rate of 89 per cent.,
and the retail portion registered an occupancy rate of 78 per cent.

WPP Campus, Shanghai

WPP Campus is a Grade A office building situated at Heng Feng Road in Jing An district in Shanghai,
with a total aboveground GFA of 73,000 sq.m. The building is close to Shanghai’s railway station and the
West Nanjing Road Central Business District, and is easily accessible by established transport networks
including subway lines 1, 3, 4, 12 and 13, buses and the inter-city high-speed train. In July 2017, the
Group acquired its co-investment partner’s 40 per cent. equity interest in the project and now wholly
owns the project. As at 31 March 2020, the office area with GFA of 56,000 sq.m. registered an occupancy
rate of 97 per cent. and the podium retail area with GFA of 4,000 sq.m. registered an occupancy rate of
100 per cent.

Nan Fung Tower, Shanghai

Set in the historic French concession area accentuated by the adjacent Hua Shan Park and part of the
Xujiahui Regional Business Centre radiation area, Nan Fung Tower with GFA of 14,000 sq.m. is a
12-storey modern, boutique international grade office building with ground level retail space erected over
a three-level basement car park completed in 2006. As at 31 March 2020, Nan Fung Tower registered an
occupancy rate of 97 per cent.

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Nan Fung International Convention and Exhibition Centre and Langham Place, Guangzhou

The development is located in the Pazhou business and commercial district. Located on the top floors of
the development is a luxury five-star hotel managed by Langham Hotels International, attracting both
business and leisure travellers. The hotel with GFA 68,000 sq.m. offers 499 rooms as well as facilities
supporting large-scale banquets and international conferences. In 2018, Langham Place Guangzhou won
“Top 10 MICE Hotel of China” and “Best Grand Ballroom”. The podium floors are designed for
commercial and exhibition use, with a capacity to accommodate up to 1,500 world-class exhibition
booths. The total GFA for exhibition is 21,000 sq.m.

The Place, Guangzhou

The Place is located in the core area of Pazhou District, one of Southern China’s wholesale trading hubs
with a direct link to the metro station. The Place consists of grade A offices and a lifestyle destination
mall with GFA of 75,000 sq.m. and registered occupancy rates of approximately 96 per cent. for the office
area and 99 per cent. for the retail area as at 31 March 2020.

Le Rendez-vous, Shanghai

Formerly known as Huai Hai Mall, the property is located in the heart of the Shanghai’s Central Business
District fronting the Middle Huaihai Road, one of Shanghai’s strongest and highest profile luxury retail
goods precincts, Le Rendez-vous is a low-rise retail property with GFA of 11,000 sq.m. comprising a
five-storey building and a basement level. The refurbishment of the property was completed in late 2019.
As at 31 March 2020, Le Rendez-vous registered an occupancy rate of 91 per cent.

C8 Project, Shanghai

In May 2019, the Group successfully obtained a land parcel with GFA of approximately 54,000 sq.m. for
office development. The land parcel is located in Xianxia Road, Changning District, and is within
walking distance from the Group’s flagship project, The Place. It is expected that significant synergies
will be created between these two projects upon the completion of development.

The expiry date of the land-use right of such land parcel is 50 years and the land use purpose is
predominantly for office use. The development is expected to be completed by 2023.

Land bank in the PRC

As at 31 March 2020, the Group had a land bank in the PRC with a total attributable GFA of
approximately 105,000 sq.m. available for development.

International

To take advantage of its property development and investment expertise in Hong Kong, the Group
selectively expands overseas and invests in property projects, particularly in gateway cities such as
London and first-tier cities in United States, with the goal of diversifying geographical risks and
enhancing its rental and other income. As at 31 March 2020, the Group had a total GFA of 1,772,000
sq. ft. of completed properties available for lease overseas.

The Group acquired a completed Grade A commercial property, 16 Old Bailey, London, in March 2015
for investment purposes. The Group holds an 80 per cent. equity interest and Crosby Group holds the
remaining 20 per cent. equity interest in the property, which is located in zone 1 of London with a GFA of
94,000 sq.ft. The property has been vacated and is undergoing a redevelopment programme with

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anticipated completion in the fourth quarter of 2020 or the first quarter of 2021. GFA will increase by 23
per cent. to approximately 114,000 sq.ft. after refurbishment. In March 2018, the Group acquired Regent
Quarter, which is situated adjacent to King’s Cross Station in Central London’s Zone 1, with 12 office
buildings and 20 retail units, with GFA of 198,000 sq. ft. for office and 65,000 sq. ft. for retail. Apart from
the United Kingdom, the Group has also invested in residential and commercial property development
projects in Singapore, Japan, Malaysia and the United States. The rental income contribution from the
Group’s international property business is not significant relative to the Group’s overall rental income.

The following table shows the Group’s attributable holdings of major investment properties overseas, as
at 31 March 2020:

Approximate
Approximate Group’s Attributable
Purpose GFA Interest GFA
(sq.ft.) (%) (sq.ft.)
COMPLETED
1 16 Old Bailey, London ............. Office 94,000 (1) 80 75,000
2 Cheapside House, London ........ Office & 81,000 (1) 100 81,000
Commercial
3 108 Cannon Street, London ...... Office 40,000 (1) 100 40,000
4 Regent Quarter, London ........... Office & 269,000 (1) 100 269,000
Commercial
5 24-02 49th Avenue, Long Island Industrial 848,000 (1) 94 797,000
City, New York .........................
6 51 Sleeper Street, Boston, Commercial 166,000 (1) 100 166,000
Massachusetts; .........................
7 1 Winthrop Square, Boston, Commercial 120,000 (1) 100 120,000
Massachusetts ..........................
8 91 Cavenagh Road, Cavenagh Rental Apartment 31,000 100 31,000
Fortuna, Singapore ...................
9 Others ...................................... N/A 14,000 100 14,000
Sub-total ................................. 1,593,000

UNDER DEVELOPMENT
1 23-30 Borden Avenue, New Industrial 407,000 44 179,000
York ........................................
Sub-total ................................. 179,000
Total ....................................... 1,772,000

Notes:
(1) Representing net internal area.

In 2015, Nan Fung and Innovo Property Group (“IPG”) formed a real estate investment and operating
platform focused on acquiring, developing and managing assets in the Greater New York City
metropolitan area. IPG is based in New York City, NY USA and brings extensive multi-sector experience
and longstanding relationships at all levels of the real estate industry.

In 2018, Nan Fung acquired a majority stake in Endurance Land LLP (“Endurance Land”) to further its
development capabilities and to build upon its expanding real estate portfolio in the United Kingdom. As
a commercial property investment and development platform, Endurance Land specialises in the
refurbishment and redevelopment of buildings, primarily within Central London.

In 2019, Nan Fung Life Sciences Real Estate LLC (“NFLSRE”) was established to acquire, develop and
manage life sciences related properties in innovation-driven markets across the United States. Based in
Boston MA, USA, NFLSRE is led by a world class management team with extensive experiences in life
sciences real estate development and operations.

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Property-related service businesses

As part of the Group’s approach to integrate its property development business vertically, it has
developed operations engaged in property-related service businesses, which broadly cover construction,
property management and mortgage financing services in Hong Kong.

Construction

The Group generally relies on its own architectural, engineering and construction efforts for the design
and construction of its projects. The Group has obtained two contractor registration licences from the
Hong Kong government and is qualified to carry out a range of construction works including site
formation, foundation and general building and alteration and additional works through its in-house ISO
9001:2000-certified registered contractors. The Group’s construction companies are also certified by the
Hong Kong Quality Assurance Agency (“HKQAA”) and conduct their construction operations through
an Integrated Management System (“IMS”). The Group has constructed a wide range of luxury
residential, high grade commercial offices, innovative shopping arcades, and city revitalisation projects.
The Group also provides some construction services to other property developers in Hong Kong and a
number of institutional academies through the Architectural Services Department of the Hong Kong
government. The Group has not generally encountered any material difficulties in sourcing labour and
building raw materials for its construction activities.

Property Management

The Group has an established property management business operated through Hon Hing Enterprises
Limited, Main Shine Development Limited, Vineberg Property Management Limited and New Charm
Management Limited, which together had approximately 1,800 employees as at 31 March 2020. Through
these companies, the Group manages over 79 projects ranging from luxury properties, large-scale
residential estates, shopping arcades, offices to industrial buildings, with GFA of more than 28 million
sq. ft. in total. These companies are committed to providing professional and quality management
services to satisfy the needs of clients. The Group believes that its services in this area have contributed
to its branding and provided the means to continually enhance its reputation among the public.

Mortgage Financing

The Group selectively extends mortgage financing to purchasers of residential units from projects
developed by the Group on a project by project basis. These mortgages typically take the form of monthly
instalment loans by way of mortgage co-financing facilities and may be in the form of a first or second
mortgage with the underlying property used as mortgage collateral.

Financial investment

The Group’s underlying assets and portfolio provides a substantial liquidity buffer and stable recurring
income to the Group. As at 31 March 2020, the Group’s Long Term Financial Assets and Trading
Securities (as those terms are defined below) amounted to approximately HK$21 billion and accounted
for approximately 13 per cent. of the Group’s total assets. As at 31 March 2020, the portfolio was largely
unleveraged.

Since July 2019, the Group’s financial investment assets are managed by Nan Fung Trinity (HK) Limited
(“Nan Fung Trinity”), a subsidiary of the Group.

Investment strategy

The Group’s investment strategy involves having part of the portfolio held for long-term investment with
the remaining portion of the portfolio being actively traded with a view to profit from market
fluctuations. The primary goal of the strategy is to generate dividend and interest income as well as
capital appreciation while maintaining sufficient liquidity to support the Group’s core operations. The
Group also acquires significant longer-term positions, including listed as well as non-listed investments,
in businesses and industries where its management knowledge and competencies can enhance value in its
investments and is in line with the Group’s vision to increase long-term sustainable returns for its
shareholders.

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The size and nature of the financial investment portfolio are dynamic and at any time depend on the
Group’s ability to identify suitable investment opportunities and its view of the market. The Group’s aim
is to search for investment opportunities that it believes to have an intrinsic value higher than their trading
prices. In general, the Group analyses potential investments based on valuation methodologies such as
price-to-earnings ratio, dividend yield, return on equity, price-to-book, price-to-net-tangible assets and
revenue growth. The Group also places great emphasis on cash flow and balance sheet strength in terms
of net debt and gearing levels, as well as interest coverage.

Investment team

The Group has appointed its subsidiary, Nan Fung Trinity, to advise and manage on a day-to-day basis the
financial investment portfolio of the Group as described above under “Investment strategy”. The Finance
and Investment Committee of the Group is mandated by the Board to oversee the Group’s overall
investment activities and guide the overall process governing the Group’s core investment and treasury
operations.

The investment team comprises investment professionals who undertake detailed investment analysis to
identify suitable opportunities. Once an investment opportunity is identified, the responsible manager
will prepare an investment proposal. If approved, an investment size will be set up for each counter within
the asset allocation framework as discussed below.

In relation to the Group’s financial investment portfolio, certain risk parameters are in place and Nan
Fung Trinity’s investment team has authority to a prescribed limit beyond which proposals are submitted
to the Finance and Investment Committee of the Group for approval. For investments above its prescribed
authority limit, the Finance and Investment Committee will submit to the Board’s Executive Committee
for final approval.

Investment classification

The analysis process is applicable to both the Group’s non-current portion of financial assets at fair value
through profit or loss (“Long Term Financial Assets”) and current portion of financial assets at fair
value through profit or loss, including derivative financial instruments (“Trading Securities”) (as
described below). Investment allocation is monitored on an ongoing basis by portfolio managers and
changes may be implemented as and when necessary.

The Group’s principal investment portfolio is classified as either Trading Securities or Long Term
Financial Assets according to accounting principles. Trading Securities are financial assets which are
acquired for the purpose of trading, or are part of a portfolio of identified financial instruments that are
managed together and for which there is evidence of a recent actual pattern of short-term profit-taking.
Long Term Financial Assets are investments, other than trading financial assets generally with a longer
investment-holding period and in some cases such are held by the Group for strategic purposes.

The average holding period for Long Term Financial Assets typically averages more than one year. In the
case of Trading Securities, the Group’s aim is to capture trading gains from short-term price anomalies.
As a result, holding periods will depend on the pace of price recovery and this can range from a few weeks
to a few months. In cases where the Group believes there is substantial upside potential after its initial
internal analysis, the Group may decide to hold the positions of certain Trading Securities for a longer
period in order to maximise returns.

The Group’s Trading Securities as at 31 March 2020 amounted to HK$6,752 million consisting mainly of
highly liquid investments. Long Term Financial Assets as at 31 March 2020 of financial investment
segment amounted to HK$14,227 million, comprising equity investments, fixed income investments,
funds and private investments.

As at 31 March 2020, the approximate breakdown of asset classes was 34 per cent. listed equities
investments, 7 per cent. fixed income investments and 59 per cent. private investments funds and
derivatives. Listed equities investments in terms of the trading book are generally blue chip, highly liquid
equities listed in Hong Kong/China, the United States, Europe and other major markets. Fixed income
investments in terms of the trading book are generally liquid and marketable securities. In terms of
regional exposure, a significant portion of exposure as at 31 March 2020 was mainly focused on Asia
Pacific, North America and a small portion on Western Europe and other regions. However, asset class
breakdowns and regional exposure are subject to change based on market conditions.

126
The following charts set out the breakdown of the Group’s financial investment portfolio by asset class,
and the Group’s equity investments by industry sector and geographical area, as at 31 March 2020. Given
the nature of the Trading Securities portfolio, the position and breakdown of the entire portfolio at any
one time does not necessarily reflect the position or breakdown at any other time.

Financial Investment Portfolio Asset Class Breakdown as at 31 March 2020

Direct
Investments, Listed Equity
Funds and 34%
Derivatives
59%

Fixed Income
7%

Listed Equities Exposure by Geographical Area as at 31 March 2020

Japan Others
2% 1%

Hong Kong/China
United States 50%
47%

Listed Equities Exposure by Industry Sector as at 31 March 2020

Industrials
9%
IT
22%

Healthcare Macro Index ETF

25% 8%
Property
4%
Tele-communication
Financial 4%
16% Media
Energy & Resources/ Utilities Communication
Basic Material Consumer 1% 2%
3% 6%

127
Risk management and investment controls

The Group primarily exercises risk control through its asset allocation process and continuous
monitoring of its portfolio. Asset allocation limits determine the amount of overall allocation as well as
allocation per major equity market. Subsequent decisions on individual investment sizes are made within
the asset allocation framework and these positions are both monitored daily by the portfolio managers of
Nan Fung Trinity and the Group.

The Group’s finance and investment committee oversees credit risk, interest rate risk and foreign
currency risk of the financial investment portfolio whilst such risks are managed on a day-to-day basis by
Nan Fung Trinity. Credit risk is managed by financial credit analysis with single position control and
continuously monitored by Nan Fung Trinity through periodic and ad hoc reviews on an as needed basis.
Interest rate risk and foreign currency risk are mitigated by futures, options and other derivatives based
on an assessment of the costs and benefits. Nan Fung Trinity provides regular risk reports to the Group.
The Group has overall oversight of risk exposure together with its other businesses on a holistic basis.

The Group has an established risk management framework to ensure that a systematic process and
delegation of responsibility is clearly set out to guide management in its investment decisions and Nan
Fung Trinity is required to follow these policies. Nan Fung Trinity has in place various types of control
measures in accordance with current legal requirements. Investment and risk meetings are held regularly,
or as the Group and Nan Fung Trinity deem appropriate, to generate ideas as well as identify short and
long-term risks. For a discussion of the Group’s financial risk management, see note 3 to the Guarantor’s
audited consolidated financial statements for the year ended 31 March 2020 set out herein.

Ongoing compliance reviews are performed with results reported to the Group’s control personnel.
Regular audits are performed with results reported to management and the Board. External legal counsel
is consulted if deemed necessary.

The Group also has in place a business continuity and disaster recovery plan for critical business
functions to ensure the resilience of critical systems and regular backup of data.

Fund I and Fund II

In 2007 the Group and Crosby Group each individually committed to invest US$50 million totalling
US$100 million in the creation of Fund I (initially called HSBC NF China Real Estate Fund, L.P.), a
private equity real estate opportunity fund established as a Guernsey limited partnership. In early 2011, a
management buy-out took place in HSIL (previously a 100 per cent. owned subsidiary of HSBC) resulting
in the management of HSIL owning 80.1 per cent. and HSBC owning 19.9 per cent. of HSIL. HSIL and
Fund I have since changed their names to InfraRed Capital Partners Limited (“IRCP”) and InfraRed NF
China Real Estate Fund, L.P., respectively. The last phase of the management buy-out was completed at
the end of August 2015 when HSBC Group relinquished its residual 19.9% stake in IRCP which resulting
the management of IRCP owning 100% of IRCP. The Group has a 25 per cent. effective interest in the
general partner which manages Fund I. Since Fund I was established in 2007, it has invested US$748.1
million of equity in 11 investments and all investments have been realised. InfraRed NF China Real
Estate Fund II (“Fund II”), as a follow-on fund to Fund I was formed with final closing in June 2015. The
Group and Crosby Group have each committed to invest US$31.875 million, totalling US$63.75 million,
in Fund II. Fund II invests in equity and debt (mezzanine) investments in a portfolio of real estate
developments and investments in the PRC and Hong Kong. As at 31 March 2020, Fund II has invested in
nine investments with aggregated fund committed equity of US$271.5 million. Six out of nine
investments of Fund II have been realised and the remaining three are expected to exit in or before 2021.

128
Life sciences investments

The Group has recognised life sciences as an area for new growth and has set up NFLS, a global platform
focusing on life sciences investments and operations. Through the bioVenture Funds, NFLS invests at all
stages in a company’s evolution, from company creation through to mid and late stage clinical
development across the Unites States, Europe and the PRC.

Pivotal bioVenture Partners Fund I, L.P is a US$300 million venture capital fund focusing on investing in
innovative therapeutic products and platforms to address major unmet medical needs in the United States
and Europe.

Pivotal bioVenture Partners China USD Fund I, L.P. is a US$200 million venture capital fund specialising
in venture building in the life sciences industry. Its investment strategy is centered on identifying
promising innovative products and technologies and bringing them to build new companies in China.

Beyond investing in the Pivotal bioVenture Funds, NFLS also invests in biotech funds managed by other
global investment managers and has a portfolio of co-investments and passive investments in the life
sciences space. NFLS’s investment team comprises of investment professionals with diverse experience
across venture capital, company building, and drug discovery and development.

Subsidiaries

The key subsidiaries of the Guarantor as at the date of this Offering Circular are set out in the following
table:

Particulars of issued Percentage of

share interest in
Place (and year) of capital/registered ownership/ voting
Name incorporation Principal activities capital power/ profit sharing
Nan Fung Property Hong Kong (1954) Investment holding HK$2,007,800 100%
Holdings Limited . . .
Nan Fung Property Hong Kong (1969) Investment holding HK$1,260,138,835 100%
Consolidated Limited . ordinary and
HK$138,834,776
non-voting deferred
Nan Fung Development Hong Kong (1975) Financing, investment HK$900,000,002 100%
Limited . . . . . . . . . holding and ordinary and
property investment HK$100,000,000
non-voting deferred
Gavast Estates Limited . Hong Kong (1980) Investment holding HK$2 100%

Further details of principal subsidiaries of the Guarantor are set out in note 38 to the Guarantor’s audited
consolidated financial statements for the year ended 31 March 2020.

Insurance

The Group is covered by insurance policies arranged with reputable insurance agents which cover loss of
rental, fire, flood, riot and strike, malicious damage, other material damage to property and development
sites, business interruption and public liability.

The Group believes that its properties are covered with adequate insurance provided by reputable
independent insurance companies and with commercially reasonable deductibles and limits on coverage.
Notwithstanding the Group’s insurance coverage, damage to the Group’s buildings, facilities, equipment,
or other properties as a result of occurrences such as fire, floods, water damage, explosion, typhoons,
riots, strikes and other natural disasters could nevertheless have a material adverse effect on the Group’s
financial condition and results of operations.

129
Laws, Rules & Regulations

The operations of the Group are subject to various laws and regulations of Hong Kong, the PRC and the
other countries and regions in which it has operations. The Group’s activities conducted on its investment
and development properties are governed by relevant statues, rules and regulations. Developments, major
building works and other re-development projects may require government permits, some of which may
take longer to obtain than others. From time to time, governments may impose new regulations on
landlords such as mandatory retrofitting of upgraded safety and fire systems in all buildings. The Group’s
properties are subject to inspections by government with regard to various safety and environmental
issues if warranted by the circumstances. Nan Fung believes that the Group is in compliance in all
material respects with government safety regulations currently in effect.

The Group has not experienced significant problems with Government regulations with regard to these
issues, and is not aware of any pending Government legislation that might have a material adverse effect
on its properties.

Environmental Matters

Nan Fung believes that the Group is in compliance in all material respects with applicable environmental
regulations in Hong Kong and the PRC. Nan Fung is not aware of any environmental proceedings or
investigations to which it is or might become a party.

Legal Proceedings

Neither Nan Fung nor any of its subsidiaries is involved in any litigation which would have a material
adverse effect on the business or financial position of the Group.

Employees

As at 31 March 2020, a total of approximately 2,700 full-time employees were engaged in the Group’s
operations, of which the majority are based in Hong Kong. The remuneration of employees is in line with
the market and commensurable with the levels of pay in the industry.

The Group has not experienced any strikes or disruptions due to labour disputes. Nan Fung considers its
relations with its employees to be good.

Financial Resources and Liquidity

As at 31 March 2020, the aggregate amount of the Group’s bank borrowings amounted to approximately
HK$19,591 million, the majority of which was on a secured basis. The maturity profile of the bank
borrowings and guaranteed notes, the cash and bank balances and the gearing ratio of the Group as at 31
March 2020 are set out as follows:

As at 31 March
2020
HK$ million
Cash and bank balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 15,646
Bank and other borrowings and guaranteed notes
Current portion (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 3,396
Non-current portion (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 28,813
Total Debt — total borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 32,209
Equity attributable to owners of the Guarantor (2) and holders of perpetual capital
securities (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 104,850
Total Debt to equity ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 30.7%
Net debt (4) to owners’ equity ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 15.8%

130
Notes:
(1) Current and non-current portion represented maturity profile of bank and other borrowings and guaranteed notes repayable
within 1 year and after 1 year, respectively.
(2) Dividend of approximately HK$1,084 million was declared and paid in Q2 2020.
(3) Includes 5.5 per cent. perpetual capital securities with an aggregate principal of US$500 million (HK$3,896 million) issued
on 29 May 2017 and the related distribution.
(4) Net debt is defined as Total Debt net of cash and bank balances.

Contingent Liabilities

As at 31 March 2020, the Group provided financial guarantee to joint ventures for bank loans related to
overseas property development project. The amount of the Group’s share of guarantee is HK$3.3 billion,
which is proportionate to the Group’s effective interest of ownership in the joint venture. See note 33 to
the Guarantor’s audited consolidated financial statements for the year ended 31 March 2020 set out
herein.

131
 MANAGEMENT

Directors

The Board of Directors of the Guarantor currently consists of seven Executive Directors of NFGHL. The
decision-making process of the Group is centralised at the level of NFGHL, a direct wholly-owned
subsidiary of the Guarantor. The Board of Directors of NFGHL (the “Board”) currently consists of 12
Directors, comprising eight Executive Directors, three Independent Non-executive Directors and one
Non-executive Director. The Board has ultimate oversight of the management of the Group, including
setting the long-term objectives of the Group, the Group’s business and commercial strategy and financial
plans to achieve these, changes to the Group’s capital structure and changes to the Group’s management
and control structure.

The following table sets out the name and position of each of the Directors of NFGHL as at the date of
this Offering Circular:

Name Position

Mr. Antony Leung . . . . . . . . . . . . . Group Chairman and Chief Executive Officer and Executive
Director
Mr. Frank Seto . . . . . . . . . . . . . . . Vice Chairman and Executive Director
Mr. Vincent Cheung . . . . . . . . . . . Group Chief Operating Officer and Managing Director
Ms. Vanessa Cheung . . . . . . . . . . . Managing Director
Mr. Stephen Cheung . . . . . . . . . . . Executive Director
Mr. Meng Gao . . . . . . . . . . . . . . . Executive Director
Mr. Joe Kwok . . . . . . . . . . . . . . . . Executive Director
Mr. Nelson Tang . . . . . . . . . . . . . . Executive Director
Dr. Norman Leung . . . . . . . . . . . . Independent Non-executive Director
Mr. Joseph Lai . . . . . . . . . . . . . . . Independent Non-executive Director
Mrs. Mignonne Cheng . . . . . . . . . . Independent Non-executive Director
Mr. Stephen Kuok . . . . . . . . . . . . . Non-executive Director

Honorary Chairman

Vivien CHEN Wai Wai retired from the positions of Chairman and Managing Director of the Group on
31 March 2016 and was appointed as the Honorary Chairman with immediate effect. The daughter of the
Group’s founder, Dr. Chen Din Hwa, Ms. Vivien Chen joined Nan Fung in 1981 and was promoted to Vice
Chairman and Managing Director in 2005. Following her father’s retirement in January 2009 and until
end March 2016, Ms. Chen served as Chairman of the Group. In addition, she currently serves as
Chairman of Crosby Investment Holdings Inc. and is a director of several of its affiliated companies,
including Vervain China Development Holdings Ltd. (formerly known as Nan Fung China Development
Holdings Ltd.) and Vervain Resources Ltd. (formerly known as Nan Fung Resources Ltd.), as well as a
director of certain other companies with the same ultimate beneficial shareholder as the Group. In
addition, Ms. Chen is a Counsellor of Our Hong Kong Foundation; the Honorary President of the
Shanghai Fraternity Association Hong Kong Limited, the International Ningbo Merchants Association
Company Limited, The United Zhejiang Residents Association (HK) Limited, and the Ning Po Residents
Association (HK) Limited. Continuing her father’s charitable legacy, Ms. Chen now chairs The D.H.
Chen Foundation Ltd., serves as a Governor of her mother’s foundation (Chen Yang Foo Oi Foundation),
and has established a foundation in her own right (The Chen Wai Wai Vivien Foundation Limited). She is
also the Honorary Vice-President of the Shanghai Charity Foundation, a charity set up by the city of
Shanghai; a member of the Board of Governors of the Hong Kong Adventist Hospital Foundation; one of
the founders of the Hong Kong Eating Disorders Association Limited; a founding member of the First
Initiative Foundation Limited; and a member of the Board of Trustees of Shaw College, The Chinese
University of Hong Kong. On 4 December 2014, The Chinese University of Hong Kong conferred an
honorary degree of Doctor of Social Science honoris causa, in recognition of Ms. Chen’s significant
business achievements and her outstanding contribution to the community, including the advancement
and development of The Chinese University of Hong Kong.

132
Executive Directors

Antony LEUNG Kam Chung is the Group Chairman & CEO of Nan Fung Group. He joined the Group
in February 2014. Prior to this, Mr. Leung was Senior Managing Director, Chairman of Greater China and
a member of the Executive Committee of Blackstone.

Before joining Blackstone, Mr. Leung was the Financial Secretary of Hong Kong Special Administrative
Region from 2001 to 2003. Prior to his appointment as Hong Kong’s Financial Secretary, he was the
Chairman of Asia for JP Morgan Chase based in Hong Kong. Before that he worked for Citi in Hong
Kong, Singapore, Manila and New York for 23 years in various positions including Head of Private
Banking for Asia, Country Corporate Officer for China and Hong Kong, Regional Treasurer for North
Asia and Head of Investment Banking for North Asia, South West Asia.

Other public service that Mr. Leung had engaged in include his role as Non-Official Member of the
Executive Council of Hong Kong SAR, Chairman of Education Commission, Chairman of University
Grants Committee, Member of Exchange Fund Advisory Committee, Director of Hong Kong Airport
Authority and Hong Kong Futures Exchange, Member of the Preparatory Committee and Election
Committee for the Hong Kong Special Administrative Region and Hong Kong Affairs Advisors.

Past board memberships include Independent Director of Industrial and Commercial Bank of China,
China Mobile (Hong Kong) Limited, American International Assurance (Hong Kong) Limited, Vice
Chairman of China National Bluestar Group, Senior Advisor and Member of the International Advisory
Board of Blackstone, International Advisory Board Member of China Development Bank and European
Advisory Group, and Chairman of Harvard Business School Association of Hong Kong.

Mr. Leung is also the Group Chairman & Co-Founder of the New Frontier Group, a group that engages in
healthcare, elderly services and investment business in China. He is an Independent Non-Executive
Director of China Merchants Bank. He serves as Chairman of two charity organisations — Heifer Hong
Kong and Food Angel.

Frank SETO Kai Shui is the Vice Chairman and an Executive Director of the Group. Mr. Seto joined the
group in 2000. In 2006, Mr. Seto was promoted to be the Group’s Executive Director and in 2010, he was
promoted to be the Group’s Vice Chairman and Executive Director. Previously, Mr. Seto was General
Manager of the Property Division of the Chevalier Group of Hong Kong. Prior to this, he practiced
corporate, commercial and real estate law in Hong Kong and Toronto, Canada. Mr. Seto was admitted as
a barrister and solicitor of the Supreme Court of Ontario, Canada, a solicitor of the Supreme Court of
England and Wales, and a solicitor of the Supreme Court of Hong Kong. Mr. Seto graduated from the
University of Western Ontario, Canada (1974, B. Sc.), the University of Ottawa, Canada (1984, LL. B.),
and McMaster University, Canada (1986, MBA).

Vincent CHEUNG Sai Sing is the Chief Operating Officer and the Managing Director of the Group since
31 March 2016 and is responsible for the Group’s overall businesses and operations. Mr. Cheung joined
Nan Fung Development Limited in 2009 and has extensive experiences in the financial sector. Before
joining Nan Fung Development Limited, Mr. Cheung was Vice President of Barclays Capital Asia
Limited from 2008 to 2009, and Vice President of Citigroup Global Markets Asia Limited from 2004 to
2008. Mr. Cheung is the son of Ms. Vivien Chen and graduated from the University of California,
Berkeley, graduating with honours in Molecular and Cell Biology in 2003.

Vanessa CHEUNG Tih Lin is the Group Managing Director and Head of Property Division of NFGHL.
She is responsible for the active management of the Group’s core real estate businesses in Hong Kong,
China, UK and US, overseeing major functions such as property development and investment, asset
management, sales, design, and project management. Ms. Cheung is also Founder of The Mills — a
revitalisation project in Hong Kong transforming the old Nan Fung Textile Mills into a new destination of
global techstyle innovations comprising 3 pillars: a startup incubator, an experimental shopfloor and an
interactive art gallery. Prior to joining the Group in October 2013, Ms. Cheung worked for AECOM as a
landscape designer and assistant project manager, managing both major public works and private
commercial projects. Ms. Cheung graduated from the University of California, Berkeley with a

133
Bachelor’s in Molecular and Cell Biology in 2006. She further pursued her graduate studies at the
Harvard University Graduate School of Design and obtained her Master’s in Landscape Architecture
degree in 2010. She is the youngest daughter of Ms. Vivien Chen.

Stephen CHEUNG Pui Kuen is an Executive Director and the Group Chief Administration Officer and
oversees the Group’s corporate governance, legal and compliance, IT systems and administration affairs.
He joined the Group in 1989 and has in-depth knowledge and participation in all segments of the Group’s
businesses. Mr. Cheung is a Chartered Secretary and before joining Nan Fung, he worked in an
international accounting firm for four years providing a full range of professional services on corporate
related matters. Prior to that, he was the Secretarial Department Manager of one of the largest listed
conglomerates in Hong Kong and had worked there for 10 years.

Meng GAO is an Executive Director and the Managing Director of the Group CEO’s office and joined the
Group in 2015. He is responsible for developing the Group’s strategic initiatives including Nan Fung Life
Sciences and overseas real estate platform, as well as overseeing the Group’s financial investment
activities. Prior to joining the Group, Mr. Gao was a Managing Director at Blackstone’s Private Equity
Group in Hong Kong where he was involved in a number of transactions across multiple industries.
Before joining Blackstone, he was a Senior Vice President at Oaktree Capital Management where he was
involved in sourcing, structuring and executing private equity investments in China. Prior to that, Mr. Gao
was an investment banker with Credit Suisse and JPMorgan in New York. Mr. Gao received a Bachelor of
Economics degree from Peking University, an M.A. from Yale University and an M.B.A. with Honors
from the Wharton School of the University of Pennsylvania.

Joe KWOK Kin Ho has been an Executive Director of NFGHL since January 2017. Mr. Kwok has been
the Chief Executive, China Property since he joined the Group in July 2015 and is responsible for the
Group’s overall property development, property investment and asset management businesses in the PRC.
He has over 30 years of real estate development and investment experience in the PRC. Before joining the
Group, he worked in Hongkong Land Holdings Limited for approximately 19 years and was the
President, China Residential Property prior to his departure. He completed the Global CEO Program for
China organised jointly by the CEIBS-Harvard Business School-IESE Business School. He graduated
from the Hong Kong Baptist University with a Bachelor’s degree in Sociology and obtained a Master of
Science degree in Real Estate from the University of Hong Kong.

Nelson TANG Chun Wai is an Executive Director and the Group Chief Financial Officer and Executive
Assistant to Group Chairman and CEO. Mr. Tang is responsible for the Group’s overall financial
management including accounting, treasury, corporate finance, tax, mortgage and investor relations, as
well as strategic acquisitions for the Group. Prior to joining the Group in 2010, Mr. Tang was an equities
trader covering Asia ex-Japan markets at Goldman Sachs Asia LLC. He graduated summa cum laude from
the Wharton School of the University of Pennsylvania, with a Bachelor of Science in Economics
concentrating in Accounting and Finance and a minor in Psychology.

Independent Non-executive Directors

Norman LEUNG Nai Pang G.B.S, LL.D., J.P. has been an Independent Non-executive Director of
NFGHL since 2009. Dr. Leung is the Chairman and an Independent Non-executive Director of Transport
International Holdings Ltd., and an Independent Non-executive Director of Sun Hung Kai Properties
Limited, both of which are listed on The Stock Exchange of Hong Kong Limited. Dr. Leung has been
active in public service for 40 years and he served as Commissioner of the Civil Aid Service from 1993 to
2007, Chairman of the Broadcasting Authority from 1997 to 2002, a member of the Advisory Committee
on Post-office Employment for former Chief Executives and Politically Appointed Officials from 2007 to
2013, Council Chairman of City University of Hong Kong from 1997 to 2003 and Pro-Chancellor of City
University of Hong Kong from 2005 to 2016. Dr. Leung is currently the Council Chairman of The Chinese
University of Hong Kong.

134
Joseph LAI Ming has been an Independent Non-executive Director of NFGHL since 2009. Mr. Lai is a
fellow member of the Hong Kong Institute of Certified Public Accountants (“HKICPA”), the Chartered
Institute of Management Accountants (“CIMA”), the Australian Institute of Certified Public Accountants
and the Hong Kong Institute of Directors. He is also a founding member and first honorary treasurer of
Opera Hong Kong Limited. Mr. Lai was the President of HKICPA in 1986 and the President of the Hong
Kong Branch of CIMA from 1974 to 1975 and 1979 to 1980.

He retired as an Independent Non-executive Director of Jolimark Holdings Limited and the chairmanship
of its Audit Committee on 21 May 2019. He is currently an Independent Non-executive Director and
Chairman of the Audit Committee of Country Garden Holdings Company Limited. Both of these
companies are listed on the Hong Kong Stock Exchange. Mr. Lai retired from the board of Guangzhou
R&F Properties Company Limited (another Hong Kong listed company) and the chairmanship of its Audit
Committee on 19 May 2017.

Mignonne DAO (“Mrs. Cheng”) has been an Independent Non-executive Director of NFGHL since
2015. Mrs. Cheng, a seasoned banker, has amassed over 40 years of experience in the financial sector
with over 28 years in senior management positions in corporate and commercial banking as well as
investment banking. Mrs. Cheng is currently the Chairman of BNP Paribas Wealth Management for Asia
Pacific and a member of the Executive Committee of BNP Paribas Wealth Management, since the
appointment in 2010. In addition, she is the G100 member of BNP Paribas Group.

Mrs. Cheng joined BNP Paribas in 1990 and has held various senior positions for the past 29 years. Prior
to joining BNP Paribas, Mrs. Cheng was with Chase Manhattan Bank Hong Kong Branch for 18 years,
where she took up various positions both on the control and on the operational sides. Mrs. Cheng was a
member of the Banking Advisory Committee chaired by The Honourable John Tsang, Financial Secretary
of the HKSAR, and has also served as a member of The Consultative Committee of the Basic Law of the
HKSAR between 1985 and 1989 when the Basic Law was being drafted.

Non-executive Director

Stephen KUOK Hoi Sang M.H. was appointed as a Non-Executive Director of NFGHL in June 2017. Mr.
Kuok is currently the Chairman and Managing Director of Chevalier Group, which is listed on The Stock
Exchange of Hong Kong Limited. Mr. Kuok has over 45 years of experience in strategic planning and
business operation management in property investment and development, investment projects, building
construction, civil engineering, building supplies, aluminum windows and curtain walls, lift and
escalator as well as electrical and mechanical engineering. Mr. Kuok is the Vice President of The Hong
Kong Federation of Electrical and Mechanical Contractors Limited, the President of The Lift and
Escalator Contractors Association in Hong Kong, the Chairman of the Hong Kong — China Branch of
The International Association of Elevator Engineers and a Registered Lift and Escalator Engineer in
Hong Kong. Mr. Kuok was a member of the Guangzhou Committee of the Chinese People’s Political
Consultative Conference from the 9th to 12th sessions. He has served on a number of Hong Kong
Government Boards and Committees, including the Election Committee, the Examination Committee
(Registration of lift engineers and escalator engineers) and the Lift and Escalator Safety Advisory
Committee of the Electrical and Mechanical Services Department (EMSD). Mr. Kuok is the father of Mr.
Raymond Kwok Chun Wai.

Senior Management

Victor MAK Yat King is a Director of Nan Fung Development Limited and the Vice Chairman — Sales
Department of the Group. He is responsible for formulating the sales and marketing strategy and land
acquisition policy of the Group in Hong Kong. Mr. Mak has over 50 years of experience in the Hong Kong
property sector. Before joining the Group, Mr. Mak worked for other property companies, such as the
Great Eagle and Far East Consortium, and has since specialised in the property development business.

135
John LAM Cheung Wah is the Vice Chairman and Executive Director of Nan Fung Property Holdings
Limited and Nan Fung Property Consolidated Limited. Mr. Lam was a senior Bank Executive with over
30 years of international experience, having worked in Canada, United States, Hong Kong and the PRC.
Having joined the Group in February 2013, Mr. Lam is responsible for the Group’s property investment in
the PRC. Mr. Lam is also an Independent Non-Executive Director of Wing Lee Property Investments
Limited. Mr. Lam graduated from Ryerson University, Toronto, Canada with a Marketing Diploma and a
Bachelor’s Degree in Business Management. He is a Fellow of Institute of Canadian Bankers (FICB) and
a Fellow of the Royal Institute of Chartered Surveyors (FRICS).

Mr. Lam is Vice Chairman of China Real Estate Chamber of Commerce, Hong Kong Chapter and a
member of the People’s Political Consultative Conference of Guangzhou.

Peter BISGAARD is a Managing Director of the Group CEO’s office and joined the Group in 2017. He
is responsible for life sciences investment strategies and operations in the United States. He was a senior
partner at Novo Ventures and had been with Novo Ventures (US) Inc. since 2009. He was responsible for
overall investment and portfolio strategy as well as ongoing development of Novo Ventures’ team in the
United States. Mr. Bisgaard was with Novo Ventures since 2001 in Denmark. Prior to Novo Ventures, he
was with McKinsey & Co. and the Firm’s Corporate Finance and Strategy Practice. Mr. Bisgaard has an
M.Sc. in Engineering from the Technical University of Denmark and has a post graduate degree in
Mathematical Modeling in Economics from the European Consortium for Mathematics in the Industry.

Raymond KWOK Chun Wai is the Senior Investment Director for International Property in the Group.
Mr. Kwok is responsible for the Group’s real estate investment activities in overseas markets with a focus
in the United Kingdom. Before joining the Group in 2015, he was working as a real estate investment
professional at Vervain Resources, as well as Lehman Brothers Real Estate Partners. Mr. Kwok also
worked as an architectural designer at Skidmore Owings & Merrill in New York. He graduated from
Cornell University with a Bachelor in Architecture. He further pursued his graduate studies at Harvard
Business School and obtained his MBA. Mr. Kwok is the son of Mr. Stephen Kuok Hoi Sang.

Helen ZHU is the Managing Director and CIO of Nan Fung Trinity (which manages the Group’s financial
investments in public and private securities and funds), she joined the Group in 2019. Prior to joining the
Group, Helen was Head of China Equities for Blackrock’s active investment group. Her responsibilities
included managing various China equities investment portfolios, overseeing China research, developing
the China equities active investing business platform, and being a board member of the onshore China
businesses. She also served on a variety of firmwide committees including BlackRock Investment
Council, EM Investment Council, Geopolitical Risk Committee etc, which formulated investment
strategies across geographies and asset classes. Before joining BlackRock in 2014, Helen spent eight
years at Goldman Sachs in Hong Kong in various capacities including Chief China Strategist and
Business Unit leader for the Asia Telecom/Internet/Media sector research team. Helen joined Goldman
Sachs from ABN AMRO, where she spent five years and was sector head of the Asian telecom research
team. Helen had previously also worked in private investing for a corporation and in investment banking
at Donaldson, Lufkin & Jenrette in Hong Kong and New York. She was educated at the Massachusetts
Institute of Technology.

Billy HUI Him Yeung is the Executive Director of Hong Kong Property Division, Director of the Group
CEO’s Office and Executive Assistant to the Group Managing Director of NFGHL. Mr. Hui is responsible
for overseeing daily operations of the Group’s real estate business in Hong Kong, China, the UK and the
US, identifying and implementing overall business process improvement, as well as managing strategic
investments for the Group. Prior to joining the Group in 2013, Mr. Hui worked in Morgan Stanley Asia
Limited and focused on managing divisional and cross-border operational issues. Mr. Hui graduated from
the Hong Kong University of Science and Technology with a Bachelor of Business Administration in
Management of Organizations and Operation Management.

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Connie Charlotte BERRY is the Treasury Director of the Group. She is responsible for the treasury
affairs of the Group, including bond issuances, investor relations, financing, cashflow, gearing and
liquidity management. Mrs. Berry has over 20 years working experience in commercial and corporate
banking in Hong Kong. Before joining the Group in 2010, she was a senior credit approver of the
Corporate Credit Management Centre of Bank of China (HK) Limited and Vice-President, Credit
Department of Agricultural Bank of China, Hong Kong Branch. Mrs. Berry graduated from the Chinese
University of Hong Kong with a Bachelor degree in Social Science, and is a Chartered Financial Analyst.

Ronald LEUNG Wei Ping is the Financial Controller of the Group. Mr. Leung joined the Group in 1992
and is responsible for finance and treasury, cash management, daily operation, reporting & tax
compliance of the Group. Mr. Leung has over 30 years of experience in the accounting field in Hong
Kong. Mr. Leung was educated in Hong Kong and is a Certified Public Accountant.

Corporate Governance

Nan Fung seeks to maintain levels of corporate governance similar to those of a listed company. As a
result, it has adopted a governance structure that includes three independent non-executive directors and
one non-executive director (out of a total of 12 Directors) on its Board and a number of Board
committees. In addition, the Group has a formalised range of policies and internal controls which are
overseen ultimately by the Board and its committees. The Group’s management provides detailed reports
to the Board on major transactions including acquisitions and disposals of the Group on a quarterly basis.

Committees of the Board

Executive Committee

The Board of Directors has delegated a range of powers to the Executive Committee which consists of all
eight Executive Directors of NFGHL. All decisions of the Executive Committee are copied to and noted
by the full Board on a regular basis.

The Board of Directors has also established six other committees, namely the Finance and Investment
Committee, which is tasked with establishing and ensuring strict adherence to risk management and
investment guidelines for the Group’s financial investment portfolio, the Group Support, Operations and
General Administration Committee, the Hong Kong Property Development and Investment Committee,
the China Property Development and Investment Committee, the International Property Development and
Investment Committee and the Life Sciences Committee. These committees oversee the management of
the major businesses of the Group subject to certain limits imposed by the terms of reference of these
committees. Authorities with limits of lesser amounts are delegated by the Board of Directors to
individual officers.

Audit Committee

The Audit Committee consists solely of two Independent Non-executive Directors, namely Norman
Leung and Joseph Lai and one Non-executive Director, Stephen Kuok.

The Audit Committee is responsible for reviewing the effectiveness of the financial reporting system and
internal control procedures. The committee monitors the integrity of the financial statements, reviewing
any significant financial reporting judgements and compliance with financial reporting standards. Other
responsibilities include engagement/removal of auditors, monitoring the auditors’ independence and
objectivity, approval of the auditors’ remuneration, discussion of audit procedures and any other related
matters.

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Remuneration Committee

The Remuneration Committee consists solely of all three Independent Non-executive Directors, namely
Norman Leung, Joseph Lai and Mignonne Cheng.

The main responsibility of the Remuneration Committee is to determine the remuneration structure of the
Executive Directors and senior management of the Group, taking into account the salaries and benefits
paid by comparable companies, as well as the time commitment and responsibilities of the Executive
Directors and senior management. It makes recommendations to the Board for the remuneration of
Non-executive Directors. It also evaluates and makes recommendations as to employee benefits. The
committee also reviews and approves performance-based remuneration by reference to the goals and
objectives set by the Board and compensation arrangements made on termination of or dismissal from
office.

The Remuneration Committee ensures that no Director is involved in deciding his/her own remuneration.

Conflicts Committee

The Conflicts Committee consists solely of all three Independent Non-Executive Directors, namely
Norman Leung, Joseph Lai and Mignonne Cheng.

The responsibility of the Conflicts Committee is to manage conflicts of interest arising as a result of the
interests of any member of the Board of Directors. The committee considers all significant contracts
between any member of the Group and any Director (or their related parties) and ensures that any such
contracts are entered into on an arm’s length and independent basis. The committee is authorised to
examine any activity within its terms of reference and may seek any information from any Director or
employee, who is required to co-operate with any request of the committee.

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 SHAREHOLDERS, DIRECTORS’ INTERESTS AND RELATED PARTY TRANSACTIONS

Shareholders

As at 31 March 2020, the issued share capital of the Guarantor was HK$62,743,532,190, comprising
62,743,532,190 no par value shares. The Guarantor is ultimately wholly owned by CGIL.

On 17 June 2012, the Group’s founder, former Chairman and sole shareholder, Dr. Chen Din Hwa passed
away following a long illness. Dr. Chen’s estate, including his 100 per cent. ownership of CGIL, is
located in a number of jurisdictions and therefore probate has had to be obtained in each such
jurisdiction. The Grant of Probate of Will in respect of Hong Kong was issued by the High Court of Hong
Kong on 16 April 2013, whilst the Grant of Probate of Will in respect of the British Virgin Islands was
issued by the High Court of Justice of the British Virgin Islands on 28 August 2013. The shares in CGIL
were transferred into the names of the executors of Dr. Chen’s will, being Ms. Vivien Chen and three
solicitors who have advised Dr. Chen and his companies over many years, on 20 November 2013, and the
executors of Dr. Chen’s will, in their capacity as such, will hold the shares for the benefit of the estate
until administration of the estate is completed and a distribution is made to the beneficiaries under the
will. One of the executors passed away in February 2018 and the shares in CGIL are now registered under
the names of the remaining three executors. The Executors have made distribution to the beneficiaries of
the Estate of cash income which the Estate received in May 2019 and May 2020. The Board of Directors
does not anticipate any change in the composition of the Board of Directors as a result of the distribution
of the estate to the beneficiaries under Dr. Chen’s will.

The beneficiaries of Dr. Chen’s will are The D.H. Chen Foundation and Dr. Chen’s family members. The
D.H. Chen Foundation is a charitable foundation founded by Dr. Chen in 1970. Ms. Vivien Chen is
currently the Chairman of the Board of Trustees of The D.H. Chen Foundation.

Directors’ Interests

As at the date of this Offering Circular, except for Mr. Antony Leung Kam Chung, Mr. Vincent Cheung
Sai Sing and Ms. Vanessa Cheung Tih Lin, none of the Directors has any interests in the shares or
underlying shares of Nan Fung, or any of its subsidiaries, joint ventures and associated companies.

Related Party Transactions

The Group has in the past engaged in transactions with its Directors and controlling shareholder and other
related parties, and expects that it will continue to enter into such transactions in the future. The Group
has in place certain checks and balances to ensure that the Group’s interests (and those of its beneficial
shareholder) are protected in relation to related party transactions.

Prior to 2009, responsibility for supervision and oversight of related party transactions was with the
respective boards and/or shareholder(s) of the relevant Group companies and/or Dr. Chen, and any related
party transaction entered into by the Group would have had to be notified, approved or sanctioned by such
parties.

In 2009, the Group constituted a Conflicts Committee with responsibility for supervision and oversight of
related party transactions carried out by the Group, which committee is presently comprised solely of the
three INEDs. This committee reviews all related party transactions and ensures that they are on
commercial terms that would apply for arm’s length transactions with independent parties. In addition,
the Audit Committee considers all related party contracts and financial arrangements and NFGHL has
specific Board guidelines in place that regulate conflicts of interest.

Significant related party transactions carried out by the Group during the two years ended 31 March 2020
and 2019 are disclosed in accordance with IFRS in note 37 to the Guarantor’s audited consolidated
financial statements for the year ended 31 March 2020. They include property development and sale,
construction, management, marketing, leasing and administrative services, and the provision of loans and
guarantees (see “Risk Factors — There are significant amounts due from the Group to its related
companies and individuals”).

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 BOOK-ENTRY CLEARANCE SYSTEMS

The information set out below is subject to any change in or reinterpretation of the rules, regulations and
procedures of Euroclear, Clearstream, Luxembourg or CMU (together, the Clearing Systems) currently in
effect. The information in this section concerning the Clearing Systems has been obtained from sources
that the Issuer and the Guarantor believe to be reliable, but none of the Issuer, the Guarantor, any Dealer
or any Arrangers takes any responsibility for the accuracy thereof. Investors wishing to use the facilities
of any of the Clearing Systems are advised to confirm the continued applicability of the rules, regulations
and procedures of the relevant Clearing System. None of the Issuer, the Guarantor or any other party to
the Agency Agreement will have any responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the Notes held through the facilities of
any Clearing System or for maintaining, supervising or reviewing any records relating to, or payments
made on account of, such beneficial ownership interests.

The relevant Pricing Supplement will specify the Clearing System(s) applicable for each Series.

The Clearing Systems

Euroclear and Clearstream, Luxembourg

Euroclear and Clearstream, Luxembourg each holds securities for participating organisations and
facilitates the clearance and settlement of securities transactions between their respective participants
through electronic book-entry changes in accounts of such participants. Euroclear and Clearstream,
Luxembourg provide to their respective participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally-traded securities and securities lending and
borrowing. Euroclear and Clearstream, Luxembourg also deal with domestic securities markets in several
countries through established depository and custodial relationships. Euroclear and Clearstream,
Luxembourg have established an electronic bridge between their two systems across which their
respective participants may settle trades with each other. Euroclear and Clearstream, Luxembourg
participants are financial institutions throughout the world, including underwriters, securities brokers
and dealers, banks, trust companies, clearing corporations and certain other organisations. Indirect access
to Euroclear or Clearstream, Luxembourg is also available to others, such as banks, brokers, dealers and
trust companies which clear through or maintain a custodial relationship with a Euroclear or Clearstream,
Luxembourg participant, either directly or indirectly.

Distributions of principal with respect to book-entry interests in the Notes held through Euroclear or
Clearstream, Luxembourg will be credited, to the extent received by the Paying Agent, to the cash
accounts of Euroclear or Clearstream, Luxembourg participants in accordance with the relevant system’s
rules and procedures.

CMU

The CMU is a central depositary service provided by the Central Moneymarkets Unit of the HKMA for
the safe custody and electronic trading between the members of this service (“CMU Members”) of
capital markets instruments (“CMU Instruments”) which are specified in the CMU Service Reference
Manual as capable of being held within the CMU. The CMU is only available for CMU Instruments
issued by a CMU Member or by a person for whom a CMU Member acts as agent for the purposes of
lodging instruments issued by such persons. Membership of the CMU is open to all members of the Hong
Kong Capital Markets Association, “authorised institutions” under the Banking Ordinance (Cap. 155) of
Hong Kong and other domestic and overseas financial institutions at the discretion of the HKMA.

Compared to clearing services provided by Euroclear and Clearstream, Luxembourg, the standard
custody and clearing service provided by the CMU is limited. In particular (and unlike the European
clearing systems), the HKMA does not as part of this service provide any facilities for the dissemination
to the relevant CMU Members of payments (of interest or principal) under, or notices pursuant to the
notice provisions of, CMU Instruments. Instead, the HKMA advises the CMU Lodging Agent (or a

140
designated paying agent) of the identities of the CMU Members to whose accounts payments in respect of
the relevant CMU Instruments are credited, whereupon the CMU Lodging Agent (or the designated
paying agent) will make the necessary payments of interest or principal or send notices directly to the
relevant CMU Members.

Similarly, the HKMA will not obtain certificates of non-U.S. beneficial ownership from CMU Members
or provide any such certificates on behalf of CMU Members. The CMU Lodging Agent will collect such
certificates from the relevant CMU Members identified from an instrument position report obtained by
request from the HKMA for this purpose.

An investor holding an interest through an account with either Euroclear or Clearstream, Luxembourg in
any Notes held in the CMU will hold that interest through the respective accounts which Euroclear and
Clearstream, Luxembourg each have with the CMU.

Book-Entry Ownership

Bearer Notes

The Issuer has made applications to Euroclear and Clearstream, Luxembourg for acceptance in their
respective book-entry systems in respect of any Series of Bearer Notes. The Issuer may also apply to have
Bearer Notes accepted for clearance through the CMU. In respect of Bearer Notes, a Temporary Bearer
Global Note and/or a Permanent Bearer Global Note will be deposited with a common depositary for
Euroclear and Clearstream, Luxembourg or a sub-custodian for the CMU. Transfers of interests in a
Temporary Bearer Global Note or a Permanent Bearer Global Note will be made in accordance with the
normal market debt securities operating procedures of the CMU, Euroclear and Clearstream,
Luxembourg.

Registered Notes

The Issuer has made applications to Euroclear and Clearstream, Luxembourg for acceptance in their
respective book-entry systems in respect of the Notes to be represented by a Registered Global Note.
Each Series of Registered Notes will have an International Securities Identification Number (“ISIN”) and
a Common Code. Investors in Notes of such Series may hold their interests in a Registered Global Note
through Euroclear or Clearstream, Luxembourg. Registered Global Notes may also be deposited with a
sub-custodian for the HKMA as operator of the CMU.

Transfers of Notes Represented by Registered Global Notes

Transfers of any interests in Notes represented by a Registered Global Note within Euroclear,
Clearstream, Luxembourg and CMU will be effected in accordance with the customary rules and
operating procedures of the relevant clearing system. Euroclear, Clearstream, Luxembourg and the CMU
have each published rules and operating procedures designed to facilitate transfers of beneficial interests
in Registered Global Notes among accountholders of Euroclear, Clearstream, Luxembourg and the CMU.
However, they are under no obligation to perform or continue to perform such procedures and such
procedures may be discontinued or changed at any time. None of the Issuer, the Guarantor, the Paying
Agents, the Registrar or any Dealer will be responsible for any performance by Euroclear, Clearstream,
Luxembourg or the CMU or their respective accountholders of their respective obligations under the rules
and procedures governing their operations and none of them will have any liability for any aspect of the
records relating to or payments made on account of beneficial interests in the Notes represented by
Registered Global Notes or for maintaining, supervising or reviewing any records relating to such
beneficial interests.

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 TAXATION

The following summary of certain British Virgin Islands and Hong Kong tax consequences of the
purchase, ownership and disposition of the Notes is based upon applicable laws, regulations, rulings and
decisions in effect as at the date of this Offering Circular, all of which are subject to change (possibly
with retroactive effect) and are included here solely for information purposes. This discussion is not
intended to be, nor should it be construed to be, legal or tax advice to any particular investor and does
not purport to be a comprehensive description of all the tax considerations that may be relevant to a
decision to purchase, own or dispose of the Notes and does not purport to deal with consequences
applicable to all categories of investors, some of which may be subject to special rules. Persons
considering the purchase of the Notes should consult their own tax advisers concerning the tax
consequences of the purchase, ownership and disposition of the Notes.

Prospective investors should consult their professional advisers on the possible tax consequences of
buying, holding or selling any Notes under the laws of their country of citizenship, residence, permanent
residence or domicile.

British Virgin Islands

The Issuer, as a company incorporated under the BVI Business Companies Act, 2004, as amended, of the
British Virgin Islands, is exempt from all provisions of the Income Tax Act (as amended) of the British
Virgin Islands (including with respect to all amounts of principal and premium payable in respect of the
Notes and other amounts payable by the Issuer to persons who are not persons resident in the British
Virgin Islands).

Capital gains realised with respect to the Notes by persons who are not persons resident in the British
Virgin Islands are also exempt from all provisions of the Income Tax Act of the British Virgin Islands.

No estate, inheritance, succession or gift tax, rate, duty, levy or other charge is payable by persons who
are not persons resident in the British Virgin Islands with respect to the Notes.

Hong Kong

Withholding Tax

No withholding tax is payable in Hong Kong in respect of payments of principal or interest on the Notes
or in respect of any capital gains arising from the sale of the Notes.

Profits Tax

Hong Kong profits tax is chargeable on every person carrying on a trade, profession or business in Hong
Kong in respect of profits arising in or derived from Hong Kong from such trade, profession or business
(excluding profits arising from the sale of capital assets).

Interest on the Notes may be deemed to be profits arising in or derived from Hong Kong from a trade,
profession or business carried on in Hong Kong in the following circumstances:

(i) interest on the Notes is derived from Hong Kong and is received by or accrues to a corporation
carrying on a trade, profession or business in Hong Kong;

(ii) interest on the Notes is derived from Hong Kong and is received by or accrues to a person, other than
a corporation, carrying on a trade, profession or business in Hong Kong and is in respect of the funds
of that trade, profession or business; or

(iii) interest on the Notes is received by or accrues to a financial institution (as defined in the Inland
Revenue Ordinance (Cap. 112) of Hong Kong) (the “IRO”) and arises through or from the carrying
on by the financial institution of its business in Hong Kong; or

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(iv) interest on the Notes is received by or accrues to a corporation, other than a financial institution, and
arises through or from the carrying on in Hong Kong by the corporation of its intra-group financing
business (within the meaning of section 16(3) of the IRO).

Sums received by or accrued to a financial institution by way of gains or profits arising through or from
the carrying on by the financial institution of its business in Hong Kong from the sale, disposal and
redemption of Notes will be subject to Hong Kong profits tax. Sums received by or accrued to a
corporation, other than a financial institution, by way of gains or profits arising through or from the
carrying on in Hong Kong by the corporation of its intra-group financing business (within the meaning of
section 16(3) of the IRO) from the sale, disposal or other redemption of Notes will be subject to Hong
Kong profits tax.

Sums derived from the sale, disposal or redemption of Notes will be subject to Hong Kong profits tax
where received by or accrued to a person, other than a corporation, who carries on a trade, profession or
business in Hong Kong and the sum has a Hong Kong source unless otherwise exempted. The source of
such sums will generally be determined by having regard to the manner in which the Notes are acquired
and disposed of.

In certain circumstances, Hong Kong profits tax exemptions (such as concessionary tax rates) may be
available. Investors are advised to consult their own tax advisors to ascertain the applicability of any
exemptions to their individual position.

Stamp Duty

Stamp duty will not be payable on the issue of Bearer Notes provided that either:

(i) such Bearer Notes are denominated in a currency other than the currency of Hong Kong and are not
repayable in any circumstances in the currency of Hong Kong; or

(ii) such Bearer Notes constitute loan capital (as defined in the Stamp Duty Ordinance (Cap. 117) of
Hong Kong) (the “SDO”).

If stamp duty is payable, it is payable by the Issuer on the issue of Bearer Notes at a rate of 3 per cent. of
the market value of the Bearer Notes at the time of issue. No stamp duty will be payable on any
subsequent transfer of Bearer Notes.

No stamp duty is payable on the issue of Registered Notes. Stamp duty may be payable on any transfer of
Registered Notes if the relevant transfer is required to be registered in Hong Kong. Stamp duty will,
however, not be payable on any transfer of Registered Notes provided that either:

(i) such Registered Notes are denominated in a currency other than the currency of Hong Kong and are
not repayable in any circumstances in the currency of Hong Kong; or

(ii) such Registered Notes constitute loan capital (as defined in the SDO).

If stamp duty is payable in respect of the transfer of Registered Notes it will be payable at the rate of 0.2
per cent. (of which 0.1 per cent. is payable by the seller and 0.1 per cent. is payable by the purchaser)
normally by reference to the consideration or its value, whichever is higher. In addition, stamp duty is
payable at the fixed rate of HK$5 on each instrument of transfer executed in relation to any transfer of the
Registered Notes if the relevant transfer is required to be registered in Hong Kong.

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The proposed financial transactions tax (“FTT”)

On 14 February 2013, the European Commission published a proposal (the “Commission’s Proposal”)
for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria,
Portugal, Slovenia and Slovakia (the “participating Member States”). However, Estonia has since
stated that it will not participate.

The Commission’s Proposal has very broad scope and could, if introduced, apply to certain dealings in
the Notes (including secondary market transactions) in certain circumstances. The issuance and
subscription of Notes should, however, be exempt.

Under the Commission’s Proposal the FTT could apply in certain circumstances to persons both within
and outside of the participating Member States. Generally, it would apply to certain dealings in the Notes
where at least one party is a financial institution, and at least one party is established in a participating
Member State. A financial institution may be, or be deemed to be, “established” in a participating
Member State in a broad range of circumstances, including (a) by transacting with a person established in
a participating Member State or (b) where the financial instrument which is subject to the dealings is
issued in a participating Member State.

However, the FTT proposal remains subject to negotiation between participating Member States. It may
therefore be altered prior to any implementation, the timing of which remains unclear. Additional EU
Member States may decide to participate.

Prospective holders of the Notes are advised to seek their own professional advice in relation to the FTT.

FATCA DISCLOSURE

Foreign Account Tax Compliance Act (“FATCA”)

Pursuant to certain provisions of the U.S. Internal Revenue Code of 1986, commonly known as FATCA,
a “foreign financial institution” (as defined by FATCA) may be required to withhold on certain payments
it makes (“foreign passthru payments”) to persons that fail to meet certain certification, reporting or
related requirements. The Issuer is a foreign financial institution for these purposes. A number of
jurisdictions have entered into, or have agreed in substance to, intergovernmental agreements with the
United States to implement FATCA (“IGAs”), which modify the way in which FATCA applies in their
jurisdictions. Under the provisions of IGAs as currently in effect, a foreign financial institution in an IGA
jurisdiction would generally not be required to withhold under FATCA or an IGA from payments that it
makes. Certain aspects of the application of the FATCA provisions and IGAs to instruments such as
Notes, including whether withholding would ever be required pursuant to FATCA or an IGA with respect
to payments on instruments such as Notes, are uncertain and may be subject to change. Even if
withholding would be required pursuant to FATCA or an IGA with respect to payments on instruments
such as Notes, such withholding would not apply to the date that is two years after the date on which final
regulations defining foreign passthru payments are published by the U.S. Federal Register, and Notes
characterised as debt (or which are not otherwise characterised as equity and have a fixed term) for U.S.
federal tax purposes that are issued on or prior to the date that is six months after the date on which final
regulations defining foreign passthru payments are published generally would be grandfathered for
purposes of FATCA withholding unless materially modified after such date (including by reason of a
substitution of the issuer). However, if additional Notes (as described under “Terms and Conditions of the
Notes — Further Issues”) that are not distinguishable from previously issued Notes are issued after the
expiration of the grandfathering period and are subject to withholding under FATCA, then withholding
agents may treat all Notes, including the Notes offered prior to the expiration of the grandfathering
period, as subject to withholding under FATCA. Holders should consult their own tax advisors regarding
how these rules may apply to their investment in Notes. In the event any withholding would be required
pursuant to FATCA or an IGA with respect to payments on the Notes, no person will be required to pay
additional amounts as a result of the withholding.

144
The Common Reporting Standard (“CRS”)

The CRS is a single global standard on Automatic Exchange of Financial Information (“AEOI”) which
was approved by the Council of the Organisation for Economic Cooperation and Development (“OECD”)
in July 2014. It draws on earlier work of the OECD and the EU, global anti-money laundering standards
and, in particular, the Model FATCA Intergovernmental Agreement. The CRS sets out details of the
financial information to be exchanged, the financial institutions required to report, together with common
due diligence standards to be subject to the information followed by financial institutions. Under the
CRS, participating jurisdictions will be required to exchange certain information held by financial
institutions regarding their non-resident customers.

The information provided above in relation to CRS is of a general nature only. Changes in circumstances
over time may affect the contents of this section. Holders should consult their own tax advisers regarding
how these rules may apply to their investment in Notes.

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 REMITTANCE OF RENMINBI INTO AND OUTSIDE THE PRC

Renminbi is not completely freely convertible currency. The remittance of Renminbi into and outside the
PRC is subject to control imposed under PRC law.

Current Account Items

Under the PRC foreign exchange control regulations, current account item payments include payments
for imports and exports of goods and services, payments of income and current transfers into and outside
the PRC.

Prior to July 2009, all current account items were required to be settled in foreign currencies. Since July
2009, the PRC has commenced a pilot scheme pursuant to which Renminbi may be used for settlement of
imports and exports of goods between approved pilot enterprises in five designated cities in the PRC
including Shanghai, Guangzhou, Dongguan, Shenzhen and Zhuhai and enterprises in designated offshore
jurisdictions including Hong Kong and Macau. In June 2010, July 2011 and February 2012 respectively,
the PRC government promulgated the “Circular on Issues concerning the Expansion of the Scope of the
Pilot Programme of Renminbi Settlement of Cross-Border Trades”, “the Circular on Expanding the
Regions of Cross-border Trade Renminbi Settlement” and the “Notice on Matters Relevant to the
Administration of Enterprises Engaged in Renminbi Settlement of Export Trade in Goods”. Pursuant to
these circulars, (i) Renminbi settlement of imports and exports of goods and of services and other current
account items became permissible, (ii) the list of designated pilot districts were expanded to cover all
provinces and cities in the PRC, (iii) the restriction on designated offshore districts has been lifted and
(iv) any enterprise qualified for the export and import business is permitted to use Renminbi as settlement
currency for exports of goods, provided that the relevant provincial government has submitted to PBOC
and five other PRC authorities (the “Six Authorities”) a list of key enterprises subject to supervision and
the Six Authorities have verified and signed off such list (the “Supervision List”). On 12 June 2012, the
PBOC issued a notice stating that the Six Authorities had jointly verified and announced a Supervision
List and as a result any enterprise qualified for the export and import business is permitted to use
Renminbi as settlement currency for exports.

On 5 July 2013, the PBOC promulgated the “Circular on Policies related to Simplifying and Improving
Cross-border Renminbi Business Procedures” (the “2013 PBOC Circular”) with the intent to improve
the efficiency of cross border Renminbi settlement and facilitate the use of RMB for the settlement of
cross border transactions under current accounts or capital accounts. In particular, the 2013 PBOC
Circular simplifies the procedures for cross border Renminbi trade settlement under current account
items. For example, PRC banks may conduct settlement for PRC enterprises upon the PRC enterprises
presenting the payment instruction, with certain exceptions. PRC banks may also allow PRC enterprises
to make/receive payments under current account items prior to the relevant PRC bank’s verification of
underlying transactions (noting that verification of underlying transactions is usually a precondition for
cross border remittance).

On 5 September 2015, the PBOC promulgated the Circular on Further Facilitating the Cross-Border
Bi-directional Renminbi Cash Pooling Business by Multinational Enterprise Groups (
) (the “2015 PBOC Circular”), which, among
others, have lowered the eligibility requirements for multinational enterprise groups and increased the
cap for net cash inflow. The 2015 PBOC Circular also provides that enterprises in the China (Shanghai)
Free Trade Pilot Zone (“Shanghai FTZ”) may establish an additional cash pool in the local scheme in the
Shanghai FTZ, but each onshore company within the group may only elect to participate in one cash pool.

As new regulations, the above circulars, rules, measures and orders will be subject to interpretation and
application by the relevant PRC authorities. Local authorities may adopt different practices in applying
these circulars and impose conditions for settlement of current account items. Further, if any new PRC
regulations are promulgated in the future which have the effect of permitting or restricting (as the case
may be) the use of Renminbi for payment of transactions categorised as current account items, then such
settlement will need to be made subject to the specific requirements or restrictions set out in such
regulations.

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Capital Account Items

Under the applicable PRC foreign exchange control regulations, capital account items include
cross-border transfers of capital, direct investments, securities investments, derivative products and
loans. Capital account payments are generally subject to approval of the relevant PRC authorities.

Settlements for capital account items are generally required to be made in foreign currencies. For
instance, foreign investors (including any Hong Kong investors) are required to make any capital
contribution to foreign invested enterprises in a foreign currency in accordance with the terms set out in
the relevant joint venture contracts and/or articles of association as approved by the relevant authorities.
Foreign invested enterprises or relevant PRC parties are also generally required to make capital item
payments including proceeds from liquidation, transfer of shares, reduction of capital, interest and
principal repayment to foreign investors in a foreign currency. That said, the relevant PRC authorities
may grant approval for a foreign entity to make a capital contribution or a shareholder’s loan to a foreign
invested enterprise with Renminbi lawfully obtained by it outside the PRC and for the foreign invested
enterprise to service interest and principal repayment to its foreign investor outside the PRC in Renminbi
on a trial basis. The foreign invested enterprise may be required to complete registration and verification
processes with the relevant PRC authorities before such Renminbi remittances.

On 7 April 2011, SAFE promulgated the SAFE Circular, which clarifies that the borrowing by an onshore
entity (including a financial institution) of Renminbi loans from an offshore creditor shall in principle
follow the current regulations on borrowing foreign debts and the provision by an onshore entity
(including a financial institution) of external guarantees in Renminbi shall in principle follow the current
regulations on the provision of external guarantees in foreign currencies. According to the 2013 PBOC
Circular, upon enforcement of external guarantees in Renminbi provided by onshore non-financial
enterprises, PRC banks may provide RMB settlement services (i.e. remittance of enforcement proceeds)
directly, which seems to indicate that SAFE approval for enforcement (which would be required in the
case of the external guarantees in foreign currencies) is no longer required. Furthermore, onshore
non-financial enterprises can (via PRC banks) extend loans in Renminbi to offshore entities within the
same group under Renminbi cash pooling arrangements and will no longer need to apply for a quota from
SAFE. However, SAFE has not amended its positions under the SAFE Circular, nor has it issued any
regulations to confirm the positions in the 2013 PBOC Circular. Therefore, there remains potential
inconsistencies between the provisions of the SAFE Circular and the provisions of the 2013 PBOC
Circular and it is unclear how SAFE will deal with such inconsistencies in practice.

On 13 October 2011, the PBOC issued the PBOC RMB FDI Measures which set out operating procedures
for PRC banks to handle RMB settlement relating to RMB FDI and borrowing by foreign invested
enterprises of offshore RMB loans. Prior to the PBOC RMB FDI Measures, cross-border RMB settlement
for RMB FDI has required approvals on a case-by-case basis from the PBOC. The new rules replace the
PBOC approval requirement with less onerous post-event registration and filing requirements. The PBOC
RMB FDI Measures cover various aspects of RMB FDI, including capital injection, payment of purchase
price in the acquisition of PRC domestic enterprises, repatriation of dividends and distribution, as well as
Renminbi denominated cross-border loans. Foreign invested enterprises, whether established or acquired
by foreign investors, shall complete the corporate information registration after the completion of
relevant RMB FDI transactions, and shall make post-event registration or filing with the PBOC of
increases or decreases in registered capital, equity transfers or swaps, merger or acquisition or other
changes to registered information.

On 5 July 2013, the PBOC promulgated the Notice on Simplifying the Procedures of Cross-border
Renminbi Business and Improving Relevant Policies (the “2013 PBOC Circular”), which simplifies the
operating procedures on current account cross-border Renminbi settlement, provision of Renminbi
outbound loans and Renminbi cross-border security in favour of offshore entities by onshore
non-financial institutions, and further published policies with respect to bank card related cross-border
Renminbi clearing and issuance of offshore Renminbi bonds by onshore non-financial institutions. The
2013 PBOC Circular intends to improve the efficiency of cross-border Renminbi settlement and facilitate
the use of cross-border Renminbi settlement by banks and enterprises.

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On 19 November 2012, the SAFE promulgated the Circular on Further Improving and Adjusting the
Foreign Exchange Administration Policies on Direct Investment (the “SAFE Circular on DI”), which
became effective on 17 December 2012. According to the SAFE Circular on DI, the SAFE removes or
adjusts certain administrative licensing items with regard to foreign exchange administration over direct
investments to promote investment, including, but not limited to, the abrogation of SAFE approval for
opening of and payment into foreign exchange accounts under direct investment accounts, the abrogation
of SAFE approval for reinvestment with legal income generated within China of foreign investors, the
simplification of the administration of foreign exchange reinvestments by foreign investment companies,
and the abrogation of SAFE approval for purchase and external payment of foreign exchange under direct
investment accounts.

On 5 September 2015, the PBOC promulgated the 2015 PBOC Circular. According to the 2015 PBOC
Circular, qualified multinational enterprise groups can extend Renminbi-denominated loans to, or borrow
Renminbi-denominated loans from, eligible offshore member entities within the same group by
leveraging the cash pooling arrangements. The Renminbi funds will be placed in a special deposit
account and may not be used to invest in stocks, financial derivatives, or non-self-use real estates, or
purchase wealth management products or extend loans to enterprises outside the group. Enterprises
within the Shanghai FTZ may establish another cash pool under the Shanghai FTZ rules to extend
inter-company loans, although Renminbi funds obtained from financing activities may not be pooled
under this arrangement. Enterprises within the Shanghai FTZ can borrow Renminbi from offshore lenders
under a pilot account-based settlement scheme within the prescribed macro prudential management limit.
In addition, non-financial enterprises in the Shanghai FTZ are allowed to settle the foreign debt proceeds
into Renminbi on a voluntary basis, provided that the proceeds should not be used beyond their business
scope or in violation of relevant laws and regulations. Pilot schemes relating to cross-border Renminbi
loans, bonds, or equity investments have also been launched for, among others, enterprises in Shenzhen
Qianhai, Jiangsu Kunshan, Jiangsu Suzhou Industrial Park.

As new regulations, the above circulars, rules, measures and orders will be subject to interpretation and
application by the relevant PRC authorities. There is no assurance that approval of such remittances,
borrowing or provision of external guarantee in Renminbi will continue to be granted or will not be
revoked in the future. Further, since the remittance of Renminbi by way of investment or loans are now
categorised as capital account items, such remittances will need to be made subject to the specific
requirements or restrictions set out in the relevant SAFE rules. If any new PRC regulations are
promulgated in the future which have the effect of permitting or restricting (as the case may be) the
remittance of Renminbi for payment of transactions categorised as capital account items, then such
remittances will need to be made subject to the specific requirements or restrictions set out in such rules.

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 SUBSCRIPTION AND SALE

The Dealers have, in an amended and restated programme agreement dated 31 July 2020 as amended
and/or supplemented from time to time (the “Programme Agreement”), agreed with the Issuer and the
Guarantor a basis on which they or any of them may from time to time agree to subscribe Notes. Any such
agreement will extend to those matters stated under “Form of the Notes” and “Terms and Conditions of
the Notes”. Under the terms of the Programme Agreement, the Issuer (failing which, the Guarantor) will
pay each relevant Dealer a commission as agreed between them in respect of Notes subscribed by it. The
Issuer (failing which, the Guarantor) has agreed to reimburse the Arranger for certain of its expenses
incurred in connection with the establishment of the Programme and any future update of the Programme
and the Dealers for certain of their activities in connection with the Programme.

The Issuer (failing which, the Guarantor) has agreed to indemnify the Dealers against certain liabilities in
connection with the offer and sale of the Notes. The Programme Agreement entitles the Dealers to
terminate any agreement that they make to subscribe Notes in certain circumstances prior to payment for
such Notes being made to the Issuer.

The Dealers and their respective affiliates are full service financial institutions engaged in various
activities, which may include securities trading, commercial and investment banking, financial advisory,
investment management, principal investment, hedging, financing and brokerage activities. Some of the
Dealers and their affiliates have engaged in, and may in the future engage in, investment banking and
other commercial dealings in the ordinary course of business with the Issuer and/or the Guarantor. The
Dealers have received, or may in the future receive, customary fees and commissions for these
transactions.

The Issuer may also from time to time agree with the relevant Dealer(s) that the Issuer may pay certain
third parties commissions (including, without limitation, rebates to private banks as may be specified in
the applicable Pricing Supplement).

In connection with the Offering of the Notes issued under the Programme, the Dealers and/or their
respective affiliates, or affiliates of the Issuer or the Guarantor, may place orders, receive allocations and
purchase Notes for their own account (without a view to distributing such Notes) and such orders and/or
allocations of the Notes may be material. Such entities may hold or sell such Notes or purchase further
Notes for their own account in the secondary market or deal in any other securities of the Issuer or the
Guarantor, and therefore, they may offer or sell the Notes or other securities otherwise than in connection
with the Offering. Accordingly, references herein to the Notes being ‘offered’ should be read as including
any offering of the Notes to the Dealers and/or their respective affiliates, or affiliates of the Issuer or the
Guarantor for their own account. Such entities are not expected to disclose such transactions or the extent
of any such investment, otherwise than in accordance with any legal or regulatory obligation to do so.
Furthermore, it is possible that only a limited number of investors may subscribe for a significant
proportion of the Notes. If this is the case, liquidity of trading in the Notes may be constrained (see “Risk
Factors — Notes issued under the Programme have no current active trading market and may trade at a
discount to their initial offering price and/or with limited liquidity”). The Issuer, the Guarantor and the
Dealers are under no obligation to disclose the extent of the distribution of the Notes amongst individual
investors.

In the ordinary course of their various business activities, the Dealers and their respective affiliates make
or hold a broad array of investments and actively trade debt and equity securities (or related derivative
securities) and financial instruments (including bank loans) for their own account and for the accounts of
their customers, and may at any time hold long and short positions in such securities and instruments.
Such investment and securities activities may involve securities and instruments of the Issuer and/or the
Guarantor, including the Notes. Certain of the Dealers or their affiliates that have a lending relationship
with the Issuer and/or the Guarantor routinely hedge their credit exposure to the Issuer and/or the
Guarantor consistent with their customary risk management policies. Typically, such Dealers and their
affiliates would hedge such exposure by entering into transactions which consist of either the purchase of
credit default swaps or the creation of short positions in the Issuer’s and/or the Guarantor’s securities,

149
including potentially the Notes offered hereby. Any such short positions could adversely affect future
trading prices of the Notes offered hereby. The Dealers and their affiliates may make investment
recommendations and/or publish or express independent research views (positive or negative) in respect
of the Notes or other financial instruments of the Issuer or the Guarantor, and may recommend to their
clients that they acquire long and/or short positions in the Notes or other financial instruments.

In connection with the issue of any tranche of Notes, the Stabilisation Manager(s) (as defined on page iv
of this Offering Circular) may, to the extent permitted by applicable laws and directives, over-allot the
Notes or effect transactions with a view to supporting the price of the Notes at a level higher than that
which might otherwise prevail, but in so doing, the Stabilisation Manager or any person acting on behalf
of the Stabilisation Manager shall act as principal and not as agent of the Issuer or the Guarantor.
However, there is no assurance that the Stabilisation Manager or any person acting on behalf of the
Stabilisation Manager will undertake stabilisation action. Any loss or profit sustained as a consequence
of any such overallotment or stabilisation shall be for the account of the relevant Dealers.

United States of America

In respect of Notes offered or sold in reliance on Category 1 as specified in the applicable Pricing
Supplement, the Notes and the Guarantee have not been and will not be registered under the Securities
Act or the securities law of any state or other jurisdiction of the United States, and the Notes may not be
offered or sold within the United States except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. Each Dealer has represented and agreed,
and each further Dealer appointed under the Programme will be required to represent and agree, that it
has not offered or sold, and will not offer or sell, any Notes constituting part of its allotment except in
accordance with Rule 903 of Regulation S under the Securities Act or pursuant to another exemption from
the registration requirements of the Securities Act.

In respect of Notes offered or sold in reliance on Category 2 as specified in the applicable Pricing
Supplement, the Notes and the Guarantee have not been and will not be registered under the Securities
Act or the securities law of any state or other jurisdiction of the United States, and the Notes may not be
offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S under the Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act. Each Dealer has represented and agreed, and each further Dealer
appointed under the Programme will be required to represent and agree, that it has not offered, sold or
delivered any Notes, and will not offer and sell any Notes (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the completion of the distribution of all Notes of the Tranche of which such
Notes are a part, only in accordance with Rule 903 of Regulation S under the Securities Act. Each Dealer
has also agreed, and each further Dealer appointed under the Programme will be required to agree, that,
at or prior to confirmation of sale of Notes, it will have sent to each distributor, dealer or person receiving
a selling concession, fee or other remuneration that purchases Notes from it during the distribution
compliance period a confirmation or notice to substantially the following effect:

“The Securities covered hereby have not been registered under the U.S. Securities Act of 1933, as
amended (the “Securities Act”) or the securities law of any state or other jurisdiction of the United
States, and may not be offered or sold within the United States or to, or for the account or benefit of,
U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the
completion of the distribution of the Securities, and except in either case in accordance with
Regulation S under the Securities Act. Terms used above have the meanings given to them by
Regulation S.”

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Terms used in the above provision have the meanings given to them by Regulation S.

In addition, until 40 days after the commencement of the offering of any identifiable tranche of such
Notes, an offer or sale of Notes within the United States by any dealer (whether or not participating in the
offering) may violate the registration requirements of the Securities Act.

The Bearer Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered
within the United States or its possessions or to a United States person, except in certain transactions
permitted by U.S. Treasury regulations. Terms used in this paragraph have the meanings given to them by
the U.S. Internal Revenue Code of 1986, as amended, and Treasury regulations promulgated thereunder.
The applicable Pricing Supplement will identify whether TEFRA C rules or TEFRA D rules apply or
whether TEFRA is not applicable.

Prohibition of Sales to EEA and UK Retail Investors

Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be
required to represent and agree, that it has not offered, sold or otherwise made available and will not
offer, sell or otherwise make available any Notes which are the subject of the offering contemplated by
this Offering Circular as completed by the Pricing Supplement in relation thereto to any retail investor in
the European Economic Area or in the United Kingdom. For the purposes of this provision:

(a) the expression “retail investor” means a person who is one (or more) of the following:

(i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or

(ii) a customer within the meaning of IDD, where that customer would not qualify as a professional
client as defined in point (10) of Article 4(1) of MiFID II; or

(iii) not a qualified investor as defined in the Prospectus Regulation); and

(b) the expression “offer” includes the communication in any form and by any means of sufficient
information on the terms of the offer and the Notes to be offered so as to enable an investor to decide
to purchase or subscribe for the Notes.

United Kingdom

Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be
required to represent and agree, that:

(a) in relation to any Notes which have a maturity of less than one year, (i) it is a person whose ordinary
activities involve it in acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of its business and (ii) it has not offered or sold and will not offer or sell any
Notes other than to persons whose ordinary activities involve them in acquiring, holding, managing
or disposing of investments (as principal or as agent) for the purposes of their businesses or who it
is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent)
for the purposes of their businesses where the issue of the Notes would otherwise constitute a
contravention of Section 19 of the FSMA by the Issuer;

(b) it has only communicated or caused to be communicated and will only communicate or cause to be
communicated an invitation or inducement to engage in investment activity (within the meaning of
Section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in
circumstances in which Section 21(1) of the FSMA does not apply to the Issuer or the Guarantor;
and

(c) it has complied and will comply with all applicable provisions of the FSMA with respect to anything
done by it in relation to any Notes in, from or otherwise involving the United Kingdom.

151
The Netherlands

Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be
required to represent and agree, that it has not, directly or indirectly, offered or sold and will not, directly
or indirectly, offer or sell the Notes in the Netherlands other than to qualified investors as defined in the
Prospectus Regulation.

Japan

The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of
Japan (Act No. 25 of 1948, as amended; the “FIEA”) and each Dealer has represented and agreed, and
each further Dealer appointed under the Programme will be required to represent and agree, that it will
not offer or sell any Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan
(as defined under Item 5, Paragraph 1, Article 6 of the Foreign Exchange and Foreign Trade Act (Act No.
228 of 1949, as amended)), or to others for re-offering or resale, directly or indirectly, in Japan or to, or
for the benefit of, a resident of Japan, except pursuant to an exemption from the registration requirements
of, and otherwise in compliance with, the FIEA and any other applicable laws, regulations and ministerial
guidelines of Japan.

Hong Kong

In relation to each Tranche of Notes to be issued by the Issuer under the Programme, each Dealer has
represented and agreed, and each further Dealer appointed under the Programme be required to represent
and agree, that:

(a) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any
Notes except for Notes which are a “structured product” as defined in the Securities and Futures
Ordinance (Cap.571) of Hong Kong (the “SFO”) other than (i) to “professional investors” as defined
in the SFO and any rules made under the SFO; or (ii) in other circumstances which do not result in
the document being a “Prospectus” as defined in the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Cap. 32) of Hong Kong (the “Companies Ordinance”) or which do not
constitute an offer to the public within the meaning of the Companies Ordinance; and

(b) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its
possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement,
invitation or document relating to the Notes, which is directed at, or the contents of which are likely
to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities
laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of
only to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any
rules made under the SFO.

PRC

Each Dealer has represented and agreed, and each further Dealer appointed under the Programme be
required to represent and agree, that neither it nor any of its affiliates has offered or sold or will offer or
sell any of the Notes, directly or indirectly, in the PRC as part of the initial distribution of the Notes,
except as permitted by the securities laws of the PRC.

Singapore

Each Dealer has acknowledged, and each further Dealer appointed under the Programme will be required
to acknowledge, that this Offering Circular has not been and will not be registered as a prospectus with
the Monetary Authority of Singapore (the “MAS”). Accordingly, each Dealer has represented, warranted
and agreed, and each further Dealer appointed under the Programme will be required to represent and
agree, that it has not offered or sold any Notes or caused such Notes to be made the subject of an
invitation for subscription or purchase and will not offer or sell any Notes or cause the Notes to be made
the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it

152
circulate or distribute, this Offering Circular or any other document or material in connection with the
offer or sale, or invitation for subscription or purchase, of the Notes, whether directly or indirectly, to any
person in Singapore other than (i) to an institutional investor (as defined in Section 4A of the Securities
and Futures Act, Chapter 289 of Singapore, as amended or modified from time to time (the “SFA”))
pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA)
pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in
accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in
accordance with the conditions of, any other applicable provision of the SFA.

Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole
business of which is to hold investments and the entire share capital of which is owned by one or
more individuals, each of whom is an accredited investor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments
and each beneficiary of the trust is an individual who is an accredited investor,

securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of
that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be
transferred within six months after that corporation or that trust has acquired the Notes pursuant to an
offer made under Section 275 of the SFA, except:

(1) to an institutional investor or to a relevant person, or to any person arising from an offer referred to
in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

(2) where no consideration is or will be given for the transfer;

(3) where the transfer is by operation of law;

(4) as specified in Section 276(7) of the SFA; or

(5) as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and
Securities-based Derivatives Contracts) Regulations 2018 of Singapore.

Singapore SFA Product Classification: In connection with Section 309B of the SFA and the Securities and
Futures (Capital Markets Products) Regulations 2018 of Singapore (the “CMP Regulations 2018”),
unless otherwise specified before an offer of Notes, the Issuer has determined, and hereby notifies all
relevant persons (as defined in Section 309A(1) of the SFA), that the Notes are ‘prescribed capital
markets products’ (as defined in the CMP Regulations 2018) and Excluded Investment Products (as
defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16:
Notice on Recommendations on Investment Products).

British Virgin Islands

Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be
required to represent and agree, that it has not made and will not make an invitation to the public or any
person resident in the British Virgin Islands to offer or sell the Notes but the Notes may be acquired by
British Virgin Islands persons who receive the offer of the Notes outside of the British Virgin Islands and
in a manner which does not contravene the laws of the jurisdiction in which such offer is received.

Taiwan

Each Dealer has represented, warranted and agreed that it has not offered, sold or delivered, and will not
offer, sell or deliver, at any time, directly or indirectly, any Notes acquired by it as part of the offering in
the ROC (the “Republic of China”) or to, or for the account or benefit of, any resident of the ROC, unless
otherwise permitted by the laws and regulations of the ROC.

153
General

Each Dealer has agreed, and each further Dealer appointed under the Programme will be required to
agree, that it will (to the best of its knowledge and belief) comply with all applicable securities laws and
regulations in force in any jurisdiction in which it purchases, offers, sells or delivers Notes or possesses
or distributes the Offering Circular and any applicable Pricing Supplement and will obtain any consent,
approval or permission required by it for the purchase, offer, sale or delivery by it of Notes under the laws
and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases,
offers, sales or deliveries and none of the Issuer, the Guarantor, the Trustee and any other Dealer shall
have any responsibility therefor. If a jurisdiction requires that an offering of Notes be made by a licensed
broker or dealer and the Dealers or any affiliate of the Dealers is a licensed broker or dealer in that
jurisdiction, such offering shall be deemed to be made by the Dealers or such affiliate on behalf of the
Issuer or the Guarantor in such jurisdiction.

None of the Issuer, the Guarantor, the Trustee or any of the Dealers represent that Notes may at any time
lawfully be sold in compliance with any applicable registration or other requirements in any jurisdiction,
or pursuant to any exemption available thereunder, or assumes any responsibility for facilitating such
sale. With regard to each Tranche, the relevant Dealer will be required to comply with any additional
restrictions agreed between the Issuer and the relevant Dealer and set out in the applicable Pricing
Supplement.

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 GENERAL INFORMATION

1. Listing of Notes: Application will be made to the SGX-ST for the listing and quotation of any Notes
that may be issued pursuant to the Programme and which are agreed at the time of issue thereof to be
so listed on the SGX-ST. Such permission will be granted when such Notes have been admitted to
the Official List of the SGX-ST. There is no assurance that the application to the SGX-ST to list a
particular series of Notes will be approved. Admission to the Official List of the SGX-ST and
quotation of any Notes on the SGX-ST is not to be taken as an indication of the merits of the
Programme, the Notes, the Guarantee, the Issuer, the Guarantor or the Guarantor’s subsidiaries. The
SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions or
reports contained herein.

For so long as any Notes are listed on the SGX-ST and the rules of the SGX-ST so require, the Issuer
shall appoint and maintain a paying agent in Singapore, where such Notes may be presented or
surrendered for payment or redemption, in the event that the Global Note(s) representing such Notes
is exchanged for definitive Notes. In addition, in the event that the Global Note(s) is exchanged for
definitive Notes, an announcement of such exchange will be made by or on behalf of the Issuer
through the SGX-ST and such announcement will include all material information with respect to
the delivery of the definitive Notes, including details of the paying agent in Singapore.

2. Authorisations: The Issuer has obtained all necessary consents, approvals and authorisations in
connection with the establishment of the Programme. The establishment of the Programme was
authorised by resolutions of the board of directors and of the sole member of the Issuer dated 6
August 2012. The Guarantor has obtained all necessary consents, approvals and authorisations in
connection with the giving and performance of the Guarantee. The giving of the Guarantee was
authorised by resolutions of the board of Directors of the Guarantor on 6 August 2012. The increase
in the aggregate nominal amount of the Programme from US$1,000,000,000 to US$2,000,000,000
was duly authorised by resolutions of the respective board of directors of the Issuer and the
Guarantor dated 5 August 2013 and 5 August 2013, respectively. The increase in the aggregate
nominal amount of the Programme from US$2,000,000,000 to US$3,000,000,000 and the update of
the Programme has been duly authorised by resolutions of the respective board of directors of the
Issuer and the Guarantor dated 17 August 2018 and 17 August 2018, respectively.

3. No Material Adverse Change: Other than as disclosed in this Offering Circular, there has been no
material adverse change in the financial or trading position or prospects of the Guarantor or the
Group since 31 March 2020.

4. Litigation: Neither the Guarantor, the Issuer nor any of their subsidiaries is involved in any
litigation or arbitration proceedings that the Guarantor believes are material in the context of the
Notes nor is the Issuer or the Guarantor aware that any such proceedings are pending or threatened.

5. Bearer Notes, Receipts, Coupons and Talons: Each Bearer Note having a maturity of more than
one year, Receipt, Coupon and Talon will bear the following legend: “Any United States person (as
defined in the Internal Revenue Code of the United States) who holds this obligation will be subject
to limitations under the United States income tax laws, including the limitations provided in
Sections 165(j) and 1287(a) of the Internal Revenue Code”.

6. Clearing of the Notes: The Notes may be accepted for clearance through Euroclear, Clearstream,
Luxembourg and the CMU. The appropriate ISIN and Common code or CMU Instrument Number in
relation to the Notes of each Tranche will be specified in the relevant Pricing Supplement. If the
Notes are to be cleared through any additional or alternative Clearing System, the appropriate
information will be specified in the applicable Pricing Supplement.

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7. Available Documents: For so long as Notes may be issued pursuant to this Offering Circular, the
following documents will be available, during usual business hours on any weekday (Saturdays,
Sundays and public holidays excepted), for inspection at the specified office of the Trustee at Level
30, HSBC Main Building, 1 Queen’s Road Central, Hong Kong:

(i) the Trust Deed (which includes the form of the Global Notes, the Notes in definitive form, the
Coupons, the Receipts and the Talons);

(ii) the Agency Agreement;

(iii) the Memorandum and Articles of Association of the Issuer and the Guarantor;

(iv) the Guarantor’s audited consolidated financial statements for the year ended 31 March 2020;

(v) the latest audited consolidated financial statements of the Guarantor;

(vi) each Pricing Supplement (save that a Pricing Supplement related to an unlisted Series of Notes
will only be available for inspection by a holder of any such Notes and such holder must
produce evidence satisfactory to the Issuer, the Guarantor or the Trustee as to its holding of
Notes and identity); and

(vii) a copy of this Offering Circular together with any supplement to this Offering Circular and any
other documents incorporated herein or therein referenced.

8. Financial Statements: The Guarantor’s audited consolidated financial statements as at and for the
year ended 31 March 2020, which are included elsewhere in this Offering Circular, have been
audited by PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, as stated in its
report appearing herein. The Guarantor intends to provide the Trustee with annual audited
consolidated financial statements and six month unaudited consolidated condensed interim financial
statements for so long as Notes may be issued pursuant to this Offering Circular.

156
 INDEX TO THE FINANCIAL INFORMATION OF THE GUARANTOR

Page

AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GUARANTOR AS AT AND

FOR THE YEAR ENDED 31 MARCH 2020

Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3

Consolidated Income Statement ............................................ F-6

Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7

Consolidated Balance Sheet ............................................... F-8

Consolidated Statement of Changes in Equity .................................. F-10

Consolidated Statement of Cash Flows ....................................... F-12

Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-14

Page references included in the Guarantor’s audited consolidated financial statements for the year ended
31 March 2020 set forth below refer to pages in such audited consolidated financial statements.

F-1
NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED

31ST MARCH 2020

F-2
INDEPENDENT AUDITOR’S REPORT
TO THE BOARD OF DIRECTORS OF NAN FUNG INTERNATIONAL HOLDINGS
LIMITED
(Incorporated in the British Virgin Islands with limited liability)

Opinion

What we have audited

The consolidated financial statements of Nan Fung International Holdings Limited (the
“Company”) and its subsidiaries (the “Group”) set out on pages 4 to 102, which comprise:
x the consolidated balance sheet as at 31st March 2020;
x the consolidated income statement for the year then ended;
x the consolidated statement of comprehensive income for the year then ended;
x the consolidated statement of changes in equity for the year then ended;
x the consolidated statement of cash flows for the year then ended; and
x the notes to the consolidated financial statements, which include a summary of significant
accounting policies.

Our opinion

In our opinion, the consolidated financial statements give a true and fair view of the consolidated
financial position of the Group as at 31st March 2020, and of its consolidated financial
performance and its consolidated cash flows for the year then ended in accordance with
International Financial Reporting Standards (“IFRSs”).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.

Independence

We are independent of the Group in accordance with the International Code of Ethics for
Professional Accountants (including International Independence Standards) issued by the
International Ethics Standards Board for Accountants (“IESBA Code”), and we have fulfilled our
other ethical responsibilities in accordance with the IESBA Code.

-1-

F-3
INDEPENDENT AUDITOR’S REPORT
TO THE BOARD OF DIRECTORS OF NAN FUNG INTERNATIONAL HOLDINGS
LIMITED (CONTINUED)
(Incorporated in the British Virgin Islands with limited liability)

Responsibilities of Directors for the Consolidated Financial Statements

The directors of the Company are responsible for the preparation of the consolidated financial
statements that give a true and fair view in accordance with IFRSs, and for such internal control
as the directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors are responsible for assessing
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors either intend
to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. We report our opinion solely to you, as a body,
in accordance with our agreed terms of engagement and for no other purpose. We do not assume
responsibility towards or accept liability to any other person for the contents of this report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of
these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
x Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
x Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.

-2-

F-4
INDEPENDENT AUDITOR’S REPORT
TO THE BOARD OF DIRECTORS OF NAN FUNG INTERNATIONAL HOLDINGS
LIMITED (CONTINUED)
(Incorporated in the British Virgin Islands with limited liability)

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

(Continued)

x Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by the directors.
x Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
x Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
x Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance
of the group audit. We remain solely responsible for our audit opinion.

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

PricewaterhouseCoopers
Certified Public Accountants

Hong Kong, 23rd June 2020

-3-

F-5
NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31ST MARCH 2020

Note 2020 2019

HK$’000 HK$’000

Revenue 5, 6 5,988,845 13,532,369

Cost of sales (1,865,482) (8,756,710)

ņņņņņņņņņņ ņņņņņņņņņņ
Gross profit 4,123,363 4,775,659

Other income and (losses)/gains, net 7 (454,065) 955,233

Net change in fair values of investment properties (417,441) 758,296

Other operating expenses (1,839,730) (1,843,776)

ņņņņņņņņņņ ņņņņņņņņņņ
Operating profit 8 1,412,127 4,645,412

Finance income 837,837 546,838

Finance expenses (301,166) (321,309)
Other finance charges and net exchange difference on
financing activities 144,326 (58,988)
Finance income, net 10 680,997 166,541
Share of results of
- Joint ventures 5 422,582 1,516,629
- Associates 5 (15,810) 513,050
ņņņņņņņņņņ ņņņņņņņņņņ
Profit before income tax 2,499,896 6,841,632

Income tax expense 11 (217,517) (584,176)

ņņņņņņņņņņ ņņņņņņņņņņ
Profit for the year 2,282,379 6,257,456
őőőőőőőőőő őőőőőőőőőő

Profit for the year attributable to:

- Owners of the Company 2,024,855 6,023,476
- Holders of perpetual capital securities 214,964 215,657
- Non-controlling interests 42,560 18,323
ņņņņņņņņņņ ņņņņņņņņņņ
2,282,379 6,257,456
őőőőőőőőőő őőőőőőőőőő

-4-
F-6
NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31ST MARCH 2020

2020 2019
HK$’000 HK$’000

Profit for the year 2,282,379 6,257,456

---------------- ----------------

Other comprehensive loss

Items that may be reclassified subsequently to profit or
loss
Share of other comprehensive loss of joint ventures and associates (50,934) (169,910)
Release of exchange reserves upon disposal of interests in
subsidiaries (680) 11,490
Release of hedging reserve upon discontinuation of hedging
relationship - (135,764)
Exchange translation differences (1,647,252) (1,430,584)
ņņņņņņņņņņ ņņņņņņņņņņ
Other comprehensive loss for the year (1,698,866) (1,724,768)
---------------- ----------------

Total comprehensive income for the year 583,513 4,532,688

őőőőőőőőőő őőőőőőőőőő

Total comprehensive income attributable to:

- Owners of the Company 372,289 4,327,099
- Holders of perpetual capital securities 214,964 215,657
- Non-controlling interests (3,740) (10,068)
ņņņņņņņņņņ ņņņņņņņņņņ
583,513 4,532,688
őőőőőőőőőő őőőőőőőőőő

-5-
F-7
NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

CONSOLIDATED BALANCE SHEET

AS AT 31ST MARCH 2020

Note 2020 2019

HK$’000 HK$’000

ASSETS
Non-current assets
Property, plant and equipment 13 2,193,780 2,878,214
Investment properties 14 74,476,965 69,776,779
Right-of-use assets 15 890,468 -
Land use rights 16 - 369,220
Joint ventures 17 8,200,649 9,326,494
Associates 18 3,424,382 7,248,354
Financial assets at fair value through profit or loss 23 14,343,838 11,869,326
Loans and other receivables 19 10,706,452 4,077,700
Amounts due from investee companies 20 47,578 45,435
Deferred income tax assets 28 269,159 234,517
ņņņņņņņņņņ ņņņņņņņņņņ
114,553,271 105,826,039
---------------- ----------------

Current assets
Properties for sale 21 15,217,725 15,415,902
Trade and other receivables, deposits and prepayments 22 7,476,291 10,556,408
Financial assets at fair value through profit or loss 23 7,571,789 10,063,720
Prepaid tax 143,740 83,580
Cash and bank balances 24 15,646,023 17,670,671
ņņņņņņņņņņ ņņņņņņņņņņ
46,055,568 53,790,281
Assets classified as held-for-sale 25 324,370 348,280
ņņņņņņņņņņ ņņņņņņņņņņ
46,379,938 54,138,561
---------------- ----------------

Total assets 160,933,209 159,964,600

őőőőőőőőőő őőőőőőőőőő

-6-
F-8
NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

CONSOLIDATED BALANCE SHEET (CONTINUED)

AS AT 31ST MARCH 2020

Note 2020 2019

HK$’000 HK$’000

EQUITY
Equity attributable to the owners of the Company
Share capital 26 62,743,532 62,743,532
Reserves 27 38,137,476 38,619,237
ņņņņņņņņņņ ņņņņņņņņņņ
100,881,008 101,362,769
Perpetual capital securities 26 3,968,568 3,969,456
ņņņņņņņņņņ ņņņņņņņņņņ
104,849,576 105,332,225
Non-controlling interests 322,619 630,651
ņņņņņņņņņņ ņņņņņņņņņņ
Total equity 105,172,195 105,962,876
---------------- ----------------

LIABILITIES
Non-current liabilities
Deferred income tax liabilities 28 3,047,849 3,066,076
Bank and other borrowings 29 28,813,367 32,819,740
Lease liabilities 129,834 -
Other long-term liabilities 74,842 11,163
ņņņņņņņņņņ ņņņņņņņņņņ
32,065,892 35,896,979
---------------- ----------------

Current liabilities
Trade and other payables, deposits and accruals 30 13,335,835 13,187,454
Contract liabilities 31 5,481,073 3,394,433
Financial liabilities at fair value through profit or loss 23 819,385 202,753
Lease liabilities 15,184 -
Bank and other borrowings 29 3,395,580 375,730
Tax payable 648,065 944,375
ņņņņņņņņņņ ņņņņņņņņņņ
23,695,122 18,104,745
---------------- ----------------

Total liabilities 55,761,014 54,001,724

---------------- ----------------

Total equity and liabilities 160,933,209 159,964,600

őőőőőőőőőő őőőőőőőőőő

On behalf of the Board

Cheung Vincent Sai Sing Leung Kam Chung

Director Director
-7-
F-9
NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31ST MARCH 2020

Attributable to owners of the Company

Perpetual Non-
Share Retained Merger Other capital controlling Total
capital earnings reserve reserves Total securities interests equity
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1st April 2019 62,743,532 73,006,850 (33,100,357) (1,287,256) 101,362,769 3,969,456 630,651 105,962,876
Adjustment on adoption of
IFRS 16 (note 2(a)(i)) - 59,151 - - 59,151 - - 59,151
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 1st April 2019, as 62,743,532 73,066,001 (33,100,357) (1,287,256) 101,421,920 3,969,456 630,651 106,022,027
restated
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------

Comprehensive income
Profit for the year - 2,024,855 - - 2,024,855 214,964 42,560 2,282,379
Other comprehensive loss - - - (1,652,566) (1,652,566) - (46,300) (1,698,866)
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
Total comprehensive
income/(loss) - 2,024,855 - (1,652,566) 372,289 214,964 (3,740) 583,513
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------

Dividend paid to owners of the

Company (note 12) - (909,781) - - (909,781) - - (909,781)
Dividend paid to non-
controlling interest - - - - - - (25,000) (25,000)
Capital injection of non-
controlling interests - - - - - - 25,693 25,693
Acquisition of non-controlling
interest (note 32 (c)) - - - (8,247) (8,247) - (282,092) (290,339)
Partial disposal of interest in
subsidiaries (note 32 (b)) - - - 4,827 4,827 - (22,893) (18,066)
Release of merger reserve upon
liquidation of a subsidiary - (27,999) 27,999 - - - - -
Transfer of statutory reserve of
an associate - (5,594) - 5,594 - - - -
Distribution paid to holders of
perpetual capital securities - - - - - (215,852) - (215,852)
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 31st March 2020 62,743,532 74,147,482 (33,072,358) (2,937,648) 100,881,008 3,968,568 322,619 105,172,195
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

-8-
F-10
NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)

FOR THE YEAR ENDED 31ST MARCH 2020

Attributable to owners of the Company

Perpetual Non-
Share Retained Merger Other capital controlling Total
capital earnings reserve reserves Total securities interests equity
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1st April 2018 62,743,532 71,645,695 (37,757,621) 404,064 97,035,670 3,969,252 624,913 101,629,835
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------

Comprehensive income
Profit for the year - 6,023,476 - - 6,023,476 215,657 18,323 6,257,456
Other comprehensive loss - - - (1,696,377) (1,696,377) - (28,391) (1,724,768)
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
Total comprehensive
income/(loss) - 6,023,476 - (1,696,377) 4,327,099 215,657 (10,068) 4,532,688
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------

Dividend paid to non-

controlling interests - - - - - - (3,510) (3,510)
Capital injection of non-
controlling interests - - - - - - 19,316 19,316
Transfer of statutory reserve of
an associate - (5,057) - 5,057 - - - -
Distribution paid to holders of
perpetual capital securities - - - - - (215,453) - (215,453)
Release of merger reserve upon
liquidation of a subsidiary - (4,657,264) 4,657,264 - - - - -
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 31st March 2019 62,743,532 73,006,850 (33,100,357) (1,287,256) 101,362,769 3,969,456 630,651 105,962,876
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

-9-
F-11
NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31ST MARCH 2020

Note 2020 2019

HK$’000 HK$’000

Cash flows from operating activities

Net cash generated from operations 32(a) 6,301,258 7,783,464
Profits tax paid (460,935) (392,537)
ņņņņņņņņņņ ņņņņņņņņņņ
Net cash from operating activities 5,840,323 7,390,927
---------------- ----------------

Cash flows from investing activities

Interest received 849,698 501,905
Purchase of property, plant and equipment (76,992) (47,793)
Proceeds from disposal of property, plant and equipment 946 1,704
Additions to investment properties (5,902,866) (1,683,131)
Proceeds from sale of investment properties - 410,904
(Increase)/decrease in amounts due from investee
companies (2,143) 3,020
Decrease in amounts due from non-controlling interests - 26,157
(Increase)/decrease in investment in and decrease in
amounts due from joint ventures (604,400) 665,804
Dividends received from joint ventures 11,250 106,250
Increase in amounts due to joint ventures 1,614,428 1,316,795
Dividends received from associates 10,000 3,000
Increase in investment in and advances to associates (203,155) (564,244)
Increase in amounts due to associates 118,835 288,952
Net proceeds from partial disposal/disposal of interests
in subsidiaries 32(b) 421,175 5,475,759
(Increase)/decrease in loans and other receivables (403,242) 51,571
Decrease/(increase) in amounts due from fellow
subsidiary companies 1,733 (3,819)
Decrease in amounts due from related companies 14,098 17,212
Decrease in amount due from an immediate holding
company 385,049 109,245
Decrease/(increase) in amount due from ultimate
holding company 21 (906)
Decrease/(increase) in short term bank deposits with
original maturities more than three months 2,667,718 (3,567,135)
Decrease in restricted bank deposits 23 28,650
ņņņņņņņņņņ ņņņņņņņņņņ
Net cash (used in)/from investing activities (1,097,824) 3,139,900
---------------- ----------------

- 10 -
F-12
NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)

FOR THE YEAR ENDED 31ST MARCH 2020

Note 2020 2019

HK$’000 HK$’000

Cash flows from financing activities 32(d)

Interest paid (1,111,921) (1,162,528)
Decrease in amounts due to related companies and
individuals (101,505) (54,728)
Decrease in amounts due to fellow subsidiaries - (248,789)
(Decrease)/increase in amount due to immediate
holding company (22) 8,024
(Decrease)/increase in amount due to ultimate holding
company (410,132) 80,476
Capital injection from non-controlling interests 25,693 19,316
Decrease in amounts due to non-controlling interests (515,323) (53,523)
Issuance of medium term note - 3,848,141
Distribution paid to holders of perpetual capital
securities (215,852) (215,453)
Principal elements of lease payments (16,012) -
Drawdown of bank and other borrowings 8,481,667 17,904,316
Repayment of bank and other borrowings (8,652,511) (23,338,329)
Dividend paid to owners of the Company (909,781) -
Dividend paid to non-controlling interest (25,000) (3,510)
Acquisition of non-controlling interests 32(c) (290,339) -
ņņņņņņņņņņ ņņņņņņņņņņ
Net cash used in financing activities (3,741,038) (3,216,587)
---------------- ----------------

Net increase in cash and cash equivalents 1,001,461 7,314,240

Cash and cash equivalents at beginning of year 13,931,949 6,776,231
Currency translation differences (358,368) (158,522)
ņņņņņņņņņņ ņņņņņņņņņņ
Cash and cash equivalents at end of year 24 14,575,042 13,931,949
őőőőőőőőőő őőőőőőőőőő

- 11 -
F-13
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 General information

Nan Fung International Holdings Limited (the “Company”) is a limited liability company
incorporated in the British Virgin Islands on 8th August 2011 and is wholly and beneficially owned
by Dr. Chen Din Hwa (“Dr. Chen”). In June 2012, Dr. Chen had deceased.

The Company and its subsidiaries are collectively referred to as the “Group”. The ultimate holding
company of the Company is Chen’s Group International Limited (“CGIL”). CGIL is wholly owned
by Dr. Chen’s Estates.

The address of the Company’s registered office is Vistra Corporate Services Centre, Wickhams Cay
II, Road Town, Tortola, VG1110, British Virgin Islands.

The Company’s principal activity is investment holding. The principal activities of the Group are
property investment and development, hotel operation, investment holding and trading, building
management, provision of construction contracting services and provision of properties related
services.

The consolidated financial statements are presented in thousands of Hong Kong dollar (“HK$’000”)
unless otherwise stated. The consolidated financial statements were approved for issue by the Board
of Directors on 23rd June 2020.

2 Summary of significant accounting policies

The significant accounting policies applied in the preparation of these consolidated financial
statements are set out below. These accounting policies have been consistently applied to all the
years presented, unless otherwise stated.

(a) Basis of preparation

These consolidated financial statements have been prepared in accordance with all applicable
International Financial Reporting Standards (“IFRSs”). The consolidated financial statements have
been prepared under the historical cost convention, as modified by the revaluation of investment
properties and financial assets and financial liabilities (including derivative financial instruments)
at fair value through profit or loss, which are carried at fair values.

The preparation of consolidated financial statements in conformity with IFRSs requires the use of
certain critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the
consolidated financial statements are disclosed in note 4.

(i) New standard, amendments to standards and interpretation adopted by the Group

The Group has adopted the following new standard, amendments to standards and
interpretation which are mandatory for the financial year beginning 1st April 2019 and are
relevant to its operation.

Annual Improvements to IFRSs Annual Improvements to IFRSs 2015 – 2017 Cycle

(Amendments)
IAS 28 (Amendments) Long-term Interests in Associates and Joint Ventures
IFRS 16 Leases
IFRS 9 (Amendments) Prepayment Features with Negative Compensation
IFRIC 23 Uncertainty over Income Tax Treatments

- 12 -
F-14
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(a) Basis of preparation (Continued)

(i) New standard, amendments to standards and interpretation adopted by the Group
(Continued)

The Group has assessed the impact of the adoption of these new standard, amendments to
standards and interpretation, except for the adoption of IFRS 16 and IAS 28 (Amendments),
there is neither significant impact on the Group’s results and financial position nor any
substantial changes in the Group’s accounting policies and presentation of the consolidated
financial statements. The changes in accounting policies and the impacts on the Group’s
results and financial position for the adoption of IFRS 16 and IAS 28 (Amendments) are
summarised below:

Effect of changes in accounting policies – IFRS 16

The Group has adopted IFRS 16 with effect from 1st April 2019 and has taken transitional
provisions not to restate comparative figures for prior periods. IFRS 16 establishes new
accounting requirements on leases which lead to the recognition of lease transactions in
lessees’ financial statements. IFRS 16 focuses on whether an arrangement contains a lease
or a service agreement and introduces a substantial change to lessee accounting. The
previous distinction between operating and finance leases is eliminated for lessee. A right-
of-use asset (representing the right to use the leased asset during the lease term) and a lease
liability (representing the obligation to pay rents) are recognised for all leases. The lessor
accounting remains largely unchanged.

In accordance with the transition provisions of IFRS 16, the Group has adopted the
modified retrospective application for existing leases at 1st April 2019 with certain
transition reliefs, and under which comparative figures are not restated. For leases
previously classified as operating leases, the Group has elected to measure the right-of-use
assets at the amounts equal to the lease liabilities adjusted by any prepaid or accrued lease
payments. Accordingly, no adjustments were recognised to the opening balance of retained
earnings at the date of initial application.

The Group applied the following practical expedients on transition to IFRS 16 for those
leases which were previously classified as operating leases under IAS 17.

• the use of a single discount rate to a portfolio of leases with reasonably similar
characteristics;
• applying the recognition exemption for leases of low value assets;
• the exclusion of initial direct costs from the measurement of the right-of-use assets;
and
• the use of hindsight in determining the lease term where the contract contains
options to extend or terminate the lease.

Upon the adoption of IFRS 16, the Group reclassified the “land use rights” under operating
leases and leasehold land under finance lease in “property, plant and equipment” to right-
of-use assets for presentation purpose.

- 13 -
F-15
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(a) Basis of preparation (Continued)

(i) New standard, amendments to standards and interpretation adopted by the Group
(Continued)

Effect of changes in accounting policies – IFRS 16 (Continued)

IFRS 16 also amends the definition of investment property under IAS 40 to include
property held by a lessee as right-of-use assets to earn rentals or for capital appreciation or
both and requires the Group to account for such right-of-use assets at their fair value.

The Group has also elected not to reassess whether a contract is or contains a lease at the
date of initial application. Instead, for contracts entered into before the transition date, the
Group relied on its assessment made previously when applying IAS 17 and IFRIC 4
Determining whether an Arrangement contains a Lease.

Upon the adoption of IFRS 16, the Group recognised lease liabilities in relation to leases
which had previously been classified as ‘operating leases’ under the principles of IAS 17.

The table below explains the difference between operating lease commitments disclosed at
31st March 2019 by applying IAS 17 and lease liabilities recognised at 1st April 2019 by
applying IFRS 16:

HK$’000

Operating lease commitments disclosed as at 31st March 2019 75,198

Discounted using the lessee’s incremental borrowing rate at the date of

initial application 67,710
Add: adjustments as a result of different treatment for extension
options 101,636
Less: short-term leases recognised on a straight-line basis as expense (13,090)
Less: low-value leases recognised on a straight-line basis as expense (2,329)
Less: leases signed in financial year ended 31st March 2019 and
commenced in financial year ended 31st March 2020 (33,532)
ņņņņņņņņņņ
Lease liabilities recognised as at 1st April 2019 120,395
őőőőőőőőőő

Represented by:
Current lease liabilities 10,692
Non-current lease liabilities 109,703
ņņņņņņņņņņ
120,395
őőőőőőőőőő

- 14 -
F-16
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(a) Basis of preparation (Continued)

(i) New standard, amendments to standards and interpretation adopted by the Group
(Continued)

Effect of changes in accounting policies – IFRS 16 (Continued)

These liabilities were measured at the present value of the remaining lease payments,
discounted using the lessee’s incremental borrowing rate as of 1st April 2019. The weighted
average lessee’s incremental borrowing rate applied to the lease liabilities on 1st April 2019
was 3.6%.

In determining the lease term, management considers all facts and circumstances that
create an economic incentive to exercise an extension option, or not to exercise a
termination option. Extension options (or periods beyond the dates when respective
termination options are exercisable) are only included in the lease term if the lease is
reasonably certain to be extended (or not be terminated). The assessment is reviewed if a
significant event or a significant change in circumstances that is within the control of the
lessee has occurred which affects this assessment. As at 1st April 2019, the financial effect
of revising the lease terms to reflect the effect of exercising extension and termination
options was an increase in both recognised lease liabilities and right-of-use assets by
HK$101,636,000.

Effect of changes in accounting policies – IAS 28 (Amendments)

Following the adoption of IAS 28 (Amendments), the Group has applied IFRS 9 to financial
instruments in its associates and joint ventures to which the equity method is no longer
applied. These include long-term interests that, in substance, form part of the Group’s net
investments in associates or joint ventures. The Group has made changes to its accounting
policies in the classification, measurement and impairment of its long-term interests in
associates or joint ventures under IFRS 9.

While the new policies are generally required to be applied retrospectively, the Group has
taken transitional provisions in IAS 28 (Amendments) not to restate comparative
information for prior periods with respect to classification and measurement (including
impairment) requirements. Therefore, comparative balances have not been restated. There
are no material differences in the carrying amounts resulting from the adoption of IAS 28
(Amendments).

The tables below show the adjustments of each individual financial statement line item by
the application of IFRS 16 and IAS 28 (Amendments). Line items that were not affected by
the changes have not been included.

- 15 -
F-17
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(a) Basis of preparation (Continued)

(i) New standard, amendments to standards and interpretation adopted by the Group
(Continued)

(a) The impacts on the Group’s consolidated balance sheet as at 1st April 2019 by the
adoption of IFRS 16 and IAS 28 (Amendments) are as follows:

As at 1st April 2019

As originally IAS 28
presented IFRS 16 (amendments) As adjusted
HK$’000 HK$’000 HK$’000 HK$’000

Consolidated balance sheet

(extract)
Non-current assets
Property, plant and
equipment
- Land and building 2,517,734 (548,867) - 1,968,867
Investment properties 69,776,779 156,323 - 69,933,102
Right-of-use assets - 941,310 - 941,310
Land use rights 369,220 (369,220) - -
Joint ventures 9,326,494 - (1,403,886) 7,922,608
Associates 7,248,354 - (3,255,200) 3,993,154
Loans and other receivables 4,077,700 - 4,659,086 8,736,786

Equity attributable to the

owners of the Company
Reserves
- Retained earnings 73,006,850 59,151 - 73,066,001

Non-current liabilities
Lease liabilities - 109,703 - 109,703

Current liabilities
Lease liabilities - 10,692 - 10,692

- 16 -
F-18
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(a) Basis of preparation (Continued)

(i) New standard, amendments to standards and interpretation adopted by the Group
(Continued)

(b) The impacts on the Group’s consolidated income statement, consolidated

statement of comprehensive income and consolidated statement of cash flows for
the year ended 31st March 2020 and consolidated balance sheet as at 31st March
2020 by the adoption of IFRS 16 and IAS 28 (Amendments) are as follows:

For the year ended 31st March 2020

Without the
adoption of
IFRS 16 and
IAS 28 IAS 28
(Amendments) IFRS 16 (Amendments) As reported
HK$’000 HK$’000 HK$’000 HK$’000

Consolidated income
statement (extract)
Other operating expenses
- Short-term and low-value
leases expenses - (21,788) - (21,788)
- Rental expense under
operating lease (37,828) 37,828 - -
- Depreciation and
amortisation of
- property, plant and
equipment (167,646) 18,570 - (149,076)
- right-of-use assets - (41,928) - (41,928)
- land use rights (12,451) 12,451 - -

Net change in fair values of

investment properties (414,971) (2,470) - (417,441)

Finance income, net

- Finance expenses (296,792) (4,374) - (301,166)

Profit for the year 2,284,090 (1,711) - 2,282,379

Profit for the year attributable

to:
- Owners of the Company 2,026,566 (1,711) - 2,024,855

- 17 -
F-19
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(a) Basis of preparation (Continued)

(i) New standard, amendments to standards and interpretation adopted by the Group
(Continued)

(b) The impacts on the Group’s consolidated income statement, consolidated

statement of comprehensive income and consolidated statement of cash flows for
the year ended 31st March 2020 and consolidated balance sheet as at 31st March
2020 by the adoption of IFRS 16 and IAS 28 (Amendments) are as follows:
(Continued)

As at 31st March 2020

Without the
adoption of
IFRS 16 and IAS
28 IAS 28
(Amendments) IFRS 16 (Amendments) As reported
HK$’000 HK$’000 HK$’000 HK$’000

Consolidated balance sheet

(extract)
Non-current assets
Property, plant and
equipment
- Land and building 2,354,012 (501,901) - 1,852,111
Investment properties 74,332,808 144,157 - 74,476,965
Right-of-use assets - 890,468 - 890,468
Land use rights 334,050 (334,050) - -
Joint ventures 11,228,776 - (3,028,127) 8,200,649
Associates 6,838,782 - (3,414,400) 3,424,382
Loans and other receivables 4,263,925 - 6,442,527 10,706,452

Equity attributable to the

owners of the Company
Reserves
- Retained earnings 74,090,042 57,440 - 74,147,482
- Other reserves (2,933,864) (3,784) - (2,937,648)

Non-current liabilities
Lease liabilities - 129,834 - 129,834

Current liabilities
Lease liabilities - 15,184 - 15,184

- 18 -
F-20
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(a) Basis of preparation (Continued)

(i) New standard, amendments to standards and interpretation adopted by the Group
(Continued)

(b) The impacts on the Group’s consolidated income statement, consolidated

statement of comprehensive income and consolidated statement of cash flows for
the year ended 31st March 2020 and consolidated balance sheet as at 31st March
2020 by the adoption of IFRS 16 and IAS 28 (Amendments) are as follows:
(Continued)

For the year ended 31st March 2020

Without the
adoption of
IFRS 16 and
IAS 28 IAS 28
(Amendments) IFRS 16 (Amendments) As adjusted
HK$’000 HK$’000 HK$’000 HK$’000

Consolidated statement of
cash flows (extract)
Cash flows from operating
activities
Profit before income tax 2,501,607 (1,711) - 2,499,896
Depreciation and
amortisation of
- property, plant and
equipment 167,646 (18,570) - 149,076
- right-of-use assets - 41,928 - 41,928
- land use rights 12,451 (12,451) - -
Finance income, net (685,371) 4,374 - (680,997)
Net change in fair values of
investment properties 414,971 2,470 - 417,441
Trade and other receivables,
deposits and prepayment 509,914 4,346 - 514,260

Net cash from operating

activities 5,819,937 20,386 - 5,840,323

Cash flows from financing

activities
Interest paid (1,107,547) (4,374) - (1,111,921)
Principle elements of lease
payments - (16,012) - (16,012)
Net cash used in financing
activities (3,720,652) (20,386) - (3,741,038)

- 19 -
F-21
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(a) Basis of preparation (Continued)

(ii) New standard and amendments to standards which are not yet effective for this financial
year and have not been early adopted by the Group

The Group has not early adopted the following new standard and amendments to standards
that have been issued but are not yet effective for the year ended 31st March 2020:

Effective for
accounting
periods beginning
on or after

Conceptual Framework for Revised Conceptual Framework for 1 January 2020

Financial Reporting 2018 Financial Reporting
IAS 1 and IAS 8 Definition of Material 1 January 2020
(Amendments)
IAS 39, IFRS 7 and IFRS 9 Interest Rate Benchmark Reform 1 January 2020
(Amendement)
IFRS 3 (Amendments) Definition of a Business 1 January 2020
IFRS 17 Insurance Contacts 1 January 2021
IFRS 10 and IAS 28 Sale or Contribution of Assets Between To be determined
(Amendments) an Investor and Its Associate or Joint
Venture

The Group will adopt the above new standard and amendments to standards and is in the
process of assessing the impact on the consolidated financial statements.

(b) Consolidation

(i) Subsidiaries

A subsidiary is an entity (including a structured entity) over which the Group has control.
The Group controls an entity when the Group is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its
power over the entity. Subsidiaries are consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The
consideration transferred for the acquisition of a subsidiary is the fair values of the assets
transferred, the liabilities incurred to the former owners of the acquiree and the equity
interests issued by the Group. The consideration transferred includes the fair value of any
DVVHWRUOLDELOLW\UHVXOWLQJIURPDFRQWLQJHQWFRQVLGHUDWLRQDUUDQJHPHQW,GHQWL¿DEOHDVVHWV
acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. Acquisition-related costs are
expensed as incurred.

Inter-company transactions, balances and unrealised gains on transactions between group

companies are eliminated unless the transaction provides evidence of an impairment of the
transferred asset. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the transferred asset.

- 20 -
F-22
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(b) Consolidation (Continued)

(i) Subsidiaries (Continued)

If the business combination is achieved in stages, the acquisition date carrying value of the
acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the
acquisition date; any gains or losses arising from such re-measurement are recognised in
profit or loss.

When the Group ceases to have control, any retained interest in the entity is re-measured
to its fair value at the date when control is lost, with the change in carrying amount
recognised in profit or loss. In addition, any amounts previously recognised in other
comprehensive income in respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities. It means the amounts previously
recognised in other comprehensive income are reclassified to profit or loss or transferred
to another category of equity as specified or permitted by applicable IFRS.

(ii) Transactions with non-controlling interests

Transactions with non-controlling interests that do not result in a loss of control are
accounted for as equity transactions. The difference between fair value of any consideration
paid and the relevant share acquired of the carrying amount of net assets of the subsidiary
is recorded in equity. Gains or losses on disposals to non-controlling interests are also
recorded in equity.

(iii) Joint arrangements

Under IFRS 11, investments in joint arrangements are classified as either joint operations
or joint ventures depending on the contractual rights and obligations of each investor,
rather than the legal structure of the joint arrangement. The Group has both joint
operations and joint ventures.

(a) Joint operations

Joint operations arise where the investors that have joint control of the
arrangement have rights to the assets and obligations for the liabilities of an
arrangement.

The Group recognises its direct right to the assets, liabilities, revenues and
expenses of joint operations and its share of any jointly held or incurred assets,
liabilities, revenues and expenses in the joint operations in accordance with the
applicable standards.

These have been incorporated in the financial statements under the appropriate
headings. Details of the joint operations are set out in note 38(a).

(b) Joint ventures

A joint venture arises where the investors that have joint control of the
arrangement have rights to the net assets of the arrangement.

- 21 -
F-23
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(b) Consolidation (Continued)

(iii) Joint arrangements (Continued)

(b) Joint ventures (Continued)

Joint ventures are accounted for using the equity method. Under the equity method
of accounting, interests in joint ventures are initially recognised at cost and
adjusted thereafter to recognise the Group’s share of the post-acquisition profits or
losses and movements in other comprehensive income of the investee in other
comprehensive income. When the Group’s share of losses in a joint venture equals
or exceeds its interest in the joint venture, the Group does not recognise further
losses, unless it has incurred obligations or made payments on behalf of the joint
venture.

(iv) Associates

An associate is an entity over which the Group has significant influence but not control,
generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method of accounting. Under
the equity method, the investment is initially recognised at cost, and the carrying amount
is increased or decreased to recognise the investor’s share of the profit or loss of the investee
after the date of acquisition. The Group’s investment in associates includes goodwill
identified on acquisition, net of any accumulated impairment loss.

The Group’s share of post-acquisition profit or loss is recognised in the consolidated income
statement, and its share of post-acquisition movements in other comprehensive income is
recognised in other comprehensive income with a corresponding adjustment to the
carrying amount of the investment. When the Group’s share of losses in an associate equals
or exceeds its interest in the associate, including any other unsecured receivables, the
Group does not recognise further losses, unless it has incurred legal or constructive
obligations or made payments on behalf of the associate.

The financial statements of the associates used for this purpose cover a year end of not more
than three months before the Group’s year end and serve as the most recent available
financial information. Where a significant event occurs between the associates’ year end
and that of the Group, adjustments are made in the consolidated financial statements for
the effect of the event.

The Group determines at each reporting date whether there is any objective evidence that
the investment in associate is impaired. If this is the case, the Group calculates the amount
of impairment as the difference between the recoverable amount of the associate and its
carrying value and recognises the amount adjacent to ‘share of results of associates’ in the
consolidated income statement.

(c) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured
using the currency of the primary economic environment in which the entity operates (“the
functional currency”). The consolidated financial statements are presented in Hong Kong
dollar (“HK dollar”), which is the Group’s presentation currency and the Company’s
functional currency.
- 22 -
F-24
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(c) Foreign currency translation (Continued)

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the
exchange rates prevailing at the dates of the transactions or valuation where items are re-
measured. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the consolidated income
statement.

Foreign exchange gains and losses that relate to borrowings are presented in the
consolidated income statement within ‘finance income/(expenses), net’. All other foreign
exchange gains and losses are presented in the consolidated income statement within ‘other
income and gains, net’.

Translation differences on non-monetary financial assets and liabilities such as equities

held at FVTPL are recognised in consolidated income statement as part of the fair value
gain or loss.

(iii) Group companies

The results and financial position of all the group entities (none of which has the currency
of a hyper-inflationary economy) that have a functional currency different from the
presentation currency are translated into the presentation currency as follows:

(a) assets and liabilities for each balance sheet presented are translated at the closing
rate at the date of that balance sheet;

(b) income and expenses for each income statement are translated at average exchange
rates (unless this average is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the rate on the dates of the transactions); and

(c) all resulting exchange differences are recognised in other comprehensive income.

When a foreign operation is partially disposed of or sold, exchange differences that were
recorded in equity are recognised in the consolidated income statement as part of the gain
or loss on disposal.

(d) Property, plant and equipment

Leasehold land classified as finance lease (policy applicable until 31st March 2019) and all other
property, plant and equipment is stated at historical cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
DSSURSULDWHRQO\ZKHQLWLVSUREDEOHWKDWIXWXUHHFRQRPLFEHQH¿WVDVVRFLDWHGZLWKWKHLWHPZLOO
flow to the Group and the cost of the item can be measured reliably. The carrying amount of the
replaced part is derecognised. All other repairs and maintenance are charged to the consolidated
income statement during the financial period in which they are incurred.

- 23 -
F-25
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(d) Property, plant and equipment (Continued)

Leasehold land classified as finance lease commences amortisation from the time when the land
interest becomes available for its intended use (policy applicable until 31st March 2019).
Depreciation on property, plant and equipment is calculated using the straight-line method to
allocate their cost to their residual values over their estimated useful lives, as follows:

Freehold land Not depreciated

Leasehold land Lease term of 40 years (Policy applicable until 31st
March 2019)
Building and hotel properties The shorter of the lease term of 40 years or estimated
useful lives
Furniture, fixtures and equipment Initial charge of 30% on cost in the year of acquisition
and 10% per annum thereafter on cost
Hotel furniture, fixtures and equipment 5% - 10% per annum on cost
Motor vehicles 25% per annum on cost

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount (note 2 (j)).

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount
and are recognised within ‘other income and gains, net’ in the consolidated income statement.

(e) Land use rights

Until 31st March 2019, land use rights represents prepaid operating lease payments which are
initially recognised at cost and released to profit or loss over the lease term on a straight-line basis.

(f) Investment properties

Investment properties, principally comprising leasehold land and buildings, are held for long-term
rental yields or for capital appreciation or both, and that are not occupied by the Group. They also
include properties that are being constructed or developed for future use as investment properties.
Land held under operating leases are accounted for as investment properties when the rest of the
definition of an investment property is met. In such cases, the operating leases concerned are
accounted for as if they were finance leases.

Investment properties are initially measured at cost, including related transaction costs and where
applicable borrowing costs. After initial recognition, investment properties are carried at fair value,
representing open market value determined at each reporting date by external valuers. Fair value
is based on active market prices, adjusted, if necessary, for any difference in the nature, location or
condition of the specific asset. If the information is not available, the Group uses alternative
valuation methods such as recent prices on less active markets or discounted cash flow projections.
Changes in fair values are recorded in the consolidated income statement.

Subsequent expenditure is charged to the asset’s carrying amount only when it is probable that
future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. All other repairs and maintenance costs are expensed in the consolidated
income statement during the financial period in which they are incurred. Investment properties
that are being redeveloped for continuing use as investment properties continue to be measured at
fair value. Fair value measurement on properties under construction is applied unless the fair value
is considered not to be reliably measurable.
- 24 -
F-26
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(f) Investment properties (Continued)

Investment properties are derecognised either when they have been disposed of or when the
investment properties are permanently withdrawn from use and no future economic benefit is
expected from its disposal.

Where the Group disposes of an investment property, the transaction price less the carrying value
immediately prior to the sale is treated as gain/loss on disposal of investment property and is
recorded in consolidated income statement within ‘other income and gains, net’.

(g) Properties under development and properties for sale

Properties under development are investments in land and buildings on which construction work
and development have not been completed, and are stated at the lower of cost and net realisable
value. Borrowing costs incurred during the construction period and up to the date of completion of
construction are capitalised as development costs. On completion, the properties are reclassified to
properties for sale at the then carrying amount.

Properties for sale are stated at the lower of cost and estimated net realisable value. Net realisable
value is the estimated selling price in the ordinary course of business less selling expenses.

(h) Leases

(i) Accounting policies applied from 1st April 2019

A lease is recognised as a right-of-use asset and a corresponding liability at the date at which
the leased asset is available for use by the Group. Each lease payment is allocated between
the liability and finance cost. The finance cost is charged to profit or loss over the lease
period so as to produce a constant rate of interest on the remaining balance of the liability
for each period. The right-of-use asset is depreciated over the shorter of the asset’s useful
life and the lease term on a straight-line basis. Assets and liabilities arising from a lease are
initially measured on a present value basis. Lease liabilities include the net present value of
the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives
receivable
• variable lease payment that are based on an index or a rate
• amounts expected to be payable by the lessee under residual value guarantees
• the exercise price of a purchase option if the lessee is reasonably certain to exercise
that option, and
• payments of penalties for terminating the lease, if the lease term reflects the lessee
exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate
cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that
the lessee would have to pay to borrow the funds necessary to obtain an asset of similar
value in a similar economic environment with similar terms and conditions.

- 25 -
F-27
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(h) Leases (Continued)

(i) Accounting policies applied from 1st April 2019 (Continued)

To determine the incremental borrowing rate, the Group:

• where possible, uses recent third-party financing received by the individual lessee
as a starting point, adjusted to reflect changes in financing conditions since third
party financing was received
• uses a build-up approach that starts with a risk-free interest rate adjusted for credit
risk for leases held by the Group, which does not have recent third party financing,
and
• makes adjustments specific to the lease, e.g. term, country, currency and security.

Right-of-use assets are measured at cost comprising the following:

• the amount of initial measurement of the lease liability

• any lease payments made at or before the commencement date less any lease
incentives received
• any initial direct costs, and
• restoration costs.

Payments associated with short-term leases and leases of low-value assets are recognised
on a straight-line basis as an expense in the consolidated income statement. Short-term
leases are leases with a lease term of 12 months or less.

Extension and termination options are included in a number of property leases across the
Group. These terms are used to maximise operational flexibility in terms of managing
contracts. The majority of extension and termination options held are exercisable only by
the Group and not by the respective lessors.

(ii) Accounting policies applied until 31st March 2019

The Group applied IFRS 16 retrospectively, but has elected not to restate comparative
information. As a result, the comparative information provided continues to be accounted
for in accordance with the Group’s previous accounting policy.

Leases in which a significant portion of the risks and rewards of ownership are retained by
the lessor are classified as operating leases. All other leases are classified as finance leases.

(a) The Group as lessor

Rental income from operating leases is recognised in the consolidated income

statement on a straight-line basis over the term of the relevant lease.

(b) The Group as lessee

Operating lease payments are recognised as an expense on a straight-line basis over

the term of the relevant lease. Benefits received and receivable as an incentive to
enter into an operating lease are recognised as a reduction of rental expense over
the lease term on a straight-line basis.

- 26 -
F-28
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(i) Financial assets

(i) Classification of financial assets

The Group classifies its financial assets in the following categories: at fair value either
through profit or loss or through other comprehensive income (“OCI”) or those to be
measured at amortised cost.

For assets measured at fair value, gains and losses will either be recorded in profit or loss
or OCI. The classification of debt financial assets depends on the entity’s business model
for managing the financial assets and the contractual terms of the cash flows. The Group
reclassifies debt investments when and only when its business model for managing those
assets changes. For investments in equity instruments that are not held for trading, this will
depend on whether the Group has made an irrevocable election at the time of initial
recognition to account for the equity investment at fair value through other comprehensive
income (“FVOCI”).

(ii) Measurement of financial assets

At initial recognition, the Group measures a financial asset at its fair value plus, in the case
of a financial asset not at fair value through profit or loss (“FVTPL”), transaction costs that
are directly attributable to the acquisition of the financial asset. Transaction costs of
financial assets carried at FVTPL are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when
determining whether their cash flows are solely payment of principal and interest.

(1) Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business

model for managing the asset and the cash flow characteristics of the asset. There
are three measurement categories into which the Group classifies its debt
instruments:

- Amortised cost: Assets that are held for collection of contractual cash flows
where those cash flows represent solely payments of principal and interest
are measured at amortised cost. Interest income from these financial
assets is included in finance income using the effective interest rate
method. Any gain or loss arising on derecognition is recognised directly in
profit or loss and presented in ‘other income and gains, net’, together with
foreign exchange gains and losses and impairment losses.
- FVOCI: Assets that are held for collection of contractual cash flows and for
selling the financial assets, where the assets’ cash flows represent solely
payments of principal and interest, are measured at FVOCI. Movements in
the carrying amount are taken through OCI, except for the recognition of
impairment losses, interest income and foreign exchange gains and losses
which are recognised in profit or loss. When the financial asset is
derecognised, the cumulative gain or loss previously recognised in OCI is
reclassified from equity to profit or loss and recognised in ‘other income
and gains, net’. Interest income from these financial assets is included in
finance income using the effective interest rate method. Foreign exchange
gains and losses and impairment expenses are presented in ‘other income
and gains, net’.

- 27 -
F-29
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(i) Financial assets (Continued)

(ii) Measurement of financial assets (Continued)

(1) Debt instruments (Continued)

- FVTPL: Assets that do not meet the criteria for amortised cost or FVOCI
are measured at FVTPL. A fair value gain or loss on a debt investment that
is subsequently measured at FVTPL and is not part of a hedging
relationship is recognised in profit or loss and presented net in the
consolidated income statement within “other income and gains, net” in the
period in which it arises. Interest income and dividend income are
recognised in the profit or loss and presented as part of revenue in the
consolidated income statement.

(2) Equity instruments

The Group subsequently measures all equity investments at FVTPL. Dividends

from such investments continue to be recognised in the consolidated income
statement as part of revenue when the Group’s right to receive payments is
established.

Changes in the fair value of financial assets at FVTPL are recognised in ‘other
income and gains, net’ in the consolidated income statement as applicable.

(iii) Impairment of financial assets

The Group assesses on a forward looking basis the expected credit loss (“ECL”) associated
with its debt instruments carried at amortised cost and FVOCI. The impairment
methodology applied depends on whether there has been a significant increase in credit
risk since initial recognition.

For trade receivables, the Group applies the simplified approach as permitted by IFRS 9,
which requires expected lifetime losses to be recognised from initial recognition of the trade
receivables.

Impairment on other debt instruments at amortised cost and FVOCI are measured as either
12-month ECL or lifetime ECL, depending on whether there has been a significant increase
in credit risk since initial recognition.

(iv) Hedge accounting

The effective portion of changes in the fair value of derivatives that are designated and
qualify as cash flow hedges is recognised in the cash flow hedge reserve within equity. The
gain or loss relating to the ineffective portion is recognised immediately in profit or loss,
within ‘other income and gains, net’.

Amounts accumulated in equity are reclassified in the periods when the hedged item affects
profit or loss. The gain or loss relating to the effective portion of the interest rate swaps
hedging variable rate borrowings is recognised in profit or loss within finance cost at the
same time as the interest expense on the hedged borrowings.

- 28 -
F-30
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(i) Financial assets (Continued)

(iv) Hedge accounting (Continued)

When a hedging instrument expires, or is sold or terminated, or when a hedge no longer

meets the criteria for hedge accounting, any cumulative gain or loss in equity at that time
remains in equity until the forecast transaction occurs. When the forecast transaction is no
longer expected to occur, the cumulative gain or loss that was reported in equity is
immediately reclassified to profit or loss.

(v) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the consolidated
balance sheet when there is a legally enforceable right to offset the recognised amounts and
there is an intention to settle on a net basis or realise the asset and settle the liability
simultaneously. The legally enforceable right must not be contingent on future events and
must be enforceable in the normal course of business and in the event of default, insolvency
or bankruptcy of the company or the counterparty.

(j) Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment. Assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

(k) Trade and other receivables

Trade receivables are amounts due from customers for goods sold or services performed in the
ordinary course of business. If collection of trade and other receivables is expected in one year or
less (or in the normal operating cycle of the business if longer), they are classified as current assets.
If not, they are presented as non-current assets.

Trade and other receivables are recognised initially at the amount of consideration that is
unconditional unless they contain significant financing components, when they are recognised at
fair value. Trade receivable are subsequently measured at amortised cost using the effective interest
method, less provision for impairment.

For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which
requires expected lifetime losses to be recognised from initial recognition of the receivables. For
other receivables, the Group assesses on a forward looking basis the ECL under 12 months expected
losses method. The impairment methodology applied depends on whether there has been a
significant increase in credit risk since initial recognition.

(l) Cash and cash equivalents

In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand,
deposits held at call with banks, other short-term highly liquid investments with original maturities
of three months or less and bank overdrafts. In the consolidated balance sheet, bank overdrafts are
shown within borrowings in current liabilities.
- 29 -
F-31
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(m) Employee benefits

(i) Employee leave entitlements

Employee entitlements to annual leave are recognised when they accrue to employees. A
provision is made for the estimated liability for annual leave as a result of services rendered
by employees up to the balance sheet date.

Employee entitlements to sick leave and maternity leave are not recognised until the time
of leave.

(ii) Pension obligations

The Group operates several defined contribution retirement schemes and mandatory
provident fund schemes which are available to all employees. The assets of the schemes are
held separately from those of the Group in independently administered funds. The Group’s
contributions under the schemes are expensed as incurred. The amount of the Group’s
contributions is based on specified percentages of the basic salaries of employees. Any
contributions forfeited by employees who leave the Group, relating to unvested benefits,
are used to reduce the Group’s ongoing contributions otherwise payable.

(iii) Bonus entitlements

The expected cost of bonus payments is recognised as liability when the Group has a present
legal or constructive obligation as a result of services rendered by employees and a reliable
estimate of the obligation can be made.

(n) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently carried at amortised cost; any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in the consolidated income statement over the period
of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to
the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee
is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that
some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity
services and amortised over the period of the facility to which it relates.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the end of the reporting period.

(o) Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers. Trade payables DUHFODVVL¿HGDVFXUUHQWOLDELOLWLHVLISD\PHQWLV
due within one year or less (or in the normal operating cycle of the business if longer). If not, they
are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method.

- 30 -
F-32
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(p) Current and deferred income tax

The tax expense for the period comprises current and deferred income tax. Tax is recognised in the
consolidated income statement, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.

(i) Current income tax

The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the balance sheet date in the countries where the Company and its
subsidiaries operate and generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation
is subject to interpretation. It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.

(ii) Deferred income tax

Inside basis differences

Deferred income tax is recognised, using the liability method, on temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the
financial statements. However, deferred income tax liabilities are not recognised if they
arise from the initial recognition of goodwill; deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit
or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted
or substantially enacted by the balance sheet date and are expected to apply when the
related deferred income tax asset is realised or the deferred income tax liability is settled.

The deferred tax liabilities in relation to investment properties in the United Kingdoms,
Singapore, Malaysia and the United States that are measured at fair value are determined
assuming the properties will be recovered entirely through sale. While deferred tax
liabilities in relation to investment properties in the PRC are determined assuming the
properties will be recovered entirely through use.

Outside basis differences

Deferred income tax liabilities are provided on taxable temporary differences arising from
investments in subsidiaries, joint ventures and associates, except for deferred income tax
liability where the timing of the reversal of the temporary difference is controlled by the
Group and it is probable that the temporary difference will not reverse in the foreseeable
future. Deferred income tax assets are recognised on deductible temporary differences
arising from investments in subsidiaries only to the extent that it is probable the temporary
difference will reverse in the future and there is sufficient taxable profit available against
which the temporary difference can be utilised.

Deferred income tax assets are recognised only to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be utilised.

- 31 -
F-33
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(p) Current and deferred income tax (Continued)

(iii) Offsetting

Deferred income tax assets and liabilities are offset when there is a legally enforceable right
to offset current tax assets against current tax liabilities and when the deferred income tax
assets and liabilities relate to income taxes levied by the same taxation authority on either
the same taxable entity or different taxable entities where there is an intention to settle the
balances on a net basis.

(q) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result
of past events; it is probable that an outflow of resources will be required to settle the obligation;
and the amount has been reliably estimated. Provisions are not recognised for future operating
losses.

Provisions are measured at the present value of the expenditures expected to be required to settle
the obligation using a pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the provision due to passage of time
is recognised as interest expense.

(r) Financial guarantee contract

A financial guarantee contract is a contract that requires the issuer to make specified payments to
reimburse the beneficiary of the guarantee for a loss the holder incurs because a specified debtor
fails to make payment when due in accordance with the terms of a debt instrument. Such financial
guarantees are given to banks, financial institutions and other bodies on behalf of subsidiaries,
associates, joint ventures and related companies to secure loans, overdrafts and other banking
facilities.

The Group regards its financial guarantees provided to its subsidiaries, associates, joint ventures
and related companies as insurance contracts. The Group assesses at each balance sheet date the
liabilities under its insurance contracts using current estimates of future cash flows. Changes in
carrying amount of these insurance liabilities are recognised in the consolidated income statement.

(s) Revenue and income recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents
amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. The
Group recognises revenue when it satisfies the identified performance obligation by transfer the
promised good or service to the customer; and when specific criteria have been met for each of the
Group’s activities, as described below. Goods and services are transferred when or as the customer
obtain control of them. The Group bases its estimate on historical results, taking into consideration
the type of customer, the type of transaction and the specifics of each arrangement.

Depending on the terms of the contract and the laws that apply to the contract, control of the good
or service may be transferred over time or at a point in time.

- 32 -
F-34
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(s) Revenue and income recognition (Continued)

Control of the good or service is transferred over time if the Group’s performance:

x provides all of the benefits received and consumed simultaneously by the customer;
x creates or enhances an asset that the customer controls as the Group performs; or
x does not create an asset with an alternative use to the Group and the Group has an
enforceable right to payment for performance completed to date

If control of the asset transfers over time, revenue is recognised over the period of the contract by
reference to the progress towards complete satisfaction of that performance obligation.

Otherwise, revenue is recognised at a point in time when the customer obtains control of the asset.

The progress towards complete satisfaction of the performance obligation is measured based on one
of the following methods that best depict the Group’s performance in satisfying the performance
obligation:

x direct measurements of the value transferred by the Group to the customer; or

x the Group’s efforts or inputs to the satisfaction of the performance obligation relative to the
total expected efforts or inputs.

Incremental costs incurred to obtain a contract, if recoverable, are capitalised as assets and
subsequently amortised when the related revenue is recognised.

The excess of cumulative revenue recognised in profit or loss over the cumulative payments made
by customers is recognised as contract assets. The excess of cumulative payments made by
customers over the cumulative revenue recognised in profit or loss is recognised as contract
liabilities.

(i) Revenue from contract with customers

(1) Sale of properties

The Group develops and sells residential properties. Revenue is recognised when
control over the property has been transferred to the customer. The properties have
generally no alternative use for the Group due to contractual restrictions. However,
an enforceable right to payment does not arise until legal title has passed to the
customer. Therefore, revenue is recognised at a point in time when the legal title
has passed to the customer.

Certain costs incurred for obtaining a pre-sale property contract would be eligible
for capitalisation under IFRS 15 and match with revenue recognition pattern of
related contract.

(2) Construction revenue

Revenue from construction service contract is recognised over the period of the
contract by reference to the progress towards complete satisfaction of that
performance obligation using input method.

- 33 -
F-35
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(s) Revenue and income recognition (Continued)

(i) Revenue from contract with customers (Continued)

(3) Hotel revenue

Hotel revenue comprises amounts earned in respect of services, facilities and goods
supplied by the hotel. Revenue from room rental is recognised over time during the
period of stay for the hotel guests. Revenue from food and beverage sales and other
ancillary services is generally recognised at a point in time when services are
rendered.

(4) Others

Property management fee income is recognised over time when the services are
rendered.

(ii) Revenue and income from other sources

(1) Rental income

Rental income is recognised on a straight-line basis over the period of the lease.

(2) Dividend income

Dividend income is recognised when the right to receive payment is established.

(3) Interest income

Interest income is recognised on a time proportion basis using the effective interest
rate method.

(t) Contract related assets and contract liabilities

Upon entering into a contract with a customer, the Group obtains rights to receive consideration
from the customer and assumes performance obligations to transfer goods or provide services to
the customer.

The combination of those rights and performance obligations gives rise to a net contract asset or a
net contract liability depending on the relationship between the remaining rights and the
performance obligations. The contract is an asset and recognised as contract assets if the cumulative
revenue recognised in profit or loss exceeds cumulative payments made by customers. Conversely,
the contract is a liability and recognised as contract liabilities if the cumulative payments made by
customers exceeds the revenue recognised in profit or loss.

Contract assets are assessed for impairment under the same approach adopted for impairment
assessment of financial assets carried at amortised cost. Contract liabilities are recognised as
revenue when the Group transfers the goods or services to the customers and therefore satisfies its
performance obligation.

- 34 -
F-36
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(t) Contract related assets and contract liabilities (Continued)

The incremental costs of obtaining a contract with a customer are capitalised and presented as
contract related assets under “contract cost assets” within “trade and other receivables, deposits
and prepayments”, if the Group expects to recover those costs, and are subsequently amortised on
a systematic basis that is consistent with the transfer to the customers of the goods or services to
which the assets relate. The Group recognises an impairment loss in the statement of
comprehensive income to the extent that the carrying amount of the contract related assets
recognised exceeds the remaining amounts of consideration that the Group expects to receive less
the costs that directly relate to those goods or services and have not been recognised as expenses.

(u) Share capital

Ordinary shares are classified as equity.

(v) Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of an
asset that necessarily takes a substantial period of time to get ready for its intended use or sale are
capitalised as part of the cost of that asset.

All other borrowing costs are charged to the consolidated income statement in the year in which
they are incurred.

(w) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision-maker. The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating segments, has been identified as
the Executive Directors that makes strategic decisions.

(x) Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will
only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the Group. It can also be a present obligation arising from past events
that is not recognised because it is not probable that outflow of economic resources will be required
or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the financial statements.
When a change in the probability of an outflow occurs so that outflow is probable, it will then be
recognised as a provision.

(y) Non-current assets (or disposal groups) held-for-sale

Non-current assets (or disposal groups) are classified as held-for-sale when their carrying amount
is to be recovered principally through a sale transaction and a sale is considered highly probable.
The non-current assets are stated at the lower of carrying amount and fair value less costs to sell.
Deferred tax assets, assets arising from employee benefits, financial assets (other than investments
in subsidiaries and associates) and investment properties, which are classified as held for sale,
would continue to be measured in accordance with the policies set out in note 2 of the consolidated
financial statements.

- 35 -
F-37
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(z) Dividend distribution

Provision is made for the amount of any dividend declared, being appropriately authorised and no
longer at the discretion of the entity, on or before the end of the reporting period but not distributed
at the end of the reporting period.

3 Financial risk management

The Group holds the following financial instruments:

2020 2019
HK$’000 HK$’000

Financial assets
Financial assets at amortised cost
Non-current assets
- Amount due from joint ventures 1,976,648 765,026
- Amount due from associates 3,414,400 3,255,200
- Loans and other receivables from third parties 2,826,742 1,927,078
- Amounts due from investee companies 47,578 45,435

Current assets
- Trade and other receivables and deposits 7,020,183 10,313,348
- Cash and bank balances 15,646,023 17,670,671

Financial assets at fair value through profit or loss

Non-current assets
- Financial assets at fair value through profit or loss 14,343,838 11,869,326
- Amount due from joint ventures at fair value through
profit or loss 745,691 638,860
- Loans receivables at fair value through profit or loss 1,742,971 2,150,622

Current assets
- Loans receivable at fair value through profit or loss 88,770 43,425
- Financial assets at fair value through profit or loss 7,571,789 10,063,720

Financial liabilities
Liabilities at amortised cost
Non-current liabilities
- Bank and other borrowings 28,813,367 32,819,740
- Lease liabilities 129,834 -

Current liabilities
- Trade and other payables, deposits and accruals 13,091,353 12,836,577
- Bank and other borrowings 3,395,580 375,730
- Lease liabilities 15,184 -

Financial liabilities at fair value through profit or loss

Non-current liabilities
- Other long-term liabilities 74,842 11,163

Current liabilities
- Financial liabilities at fair value through profit or loss 819,385 202,753

- 36 -
F-38
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 Financial risk management (continued)

(a) Financial risk factors

The Group’s activities expose it to various types of financial risk which include equity price risk,
credit risk, interest rate risk, foreign exchange risk and liquidity risk. The Group’s overall risk
management programme seeks to minimise the potential adverse effects it may have on the Group’s
financial performance.

(i) Price risk

The Group is exposed to equity price changes arising from investments classified as
financial assets at fair value through profit or loss. To manage its price risk arising from
investments in equity securities, the Group diversifies its portfolio. The investments are
made either for strategic purposes, or for the purpose of achieving investment yield and
balancing the Group’s liquidity level simultaneously. Each investment is managed by senior
management on a case by case basis.

As at 31st March 2020, if the market values of the Group’s financial assets at fair value
through profit or loss increase/decrease by 10%, with all other variables held constant, the
Group’s post-tax profit and total equity would increase/decrease by approximately
HK$674,654,000 (2019: HK$796,990,000).

(ii) Credit risk

At each balance sheet date, the Group’s maximum exposure to credit risk in the event of the
counterparties failure to discharge their obligations are in relation to each class of
recognised financial assets as stated in the consolidated balance sheet.

The Group’s financial assets which are potentially subject to credit risk consist of financial
assets at amortised cost, including cash and bank balances, trade and other receivables and
deposits, loans and other receivables and amounts due from fellow subsidiary companies,
investee companies, related companies, non-controlling interests, an immediate holding
company, ultimate holding company, joint ventures and associates. The exposures to these
credit risks are closely monitored on an ongoing basis by established credit control
procedures in each of its core businesses.

Credit risk of cash and bank balances

With respect to credit risk arising on cash and bank balances, the Group has limited its
credit exposure by restricting their selection of financial institutions and banks with good
credit rating as at 31st March 2020 ranging from AA- to BBB- issued by Standard and Poor’s
or Moody’s as follows:

2020 2019
HK$’000 HK$’000

AA- 1,269,251 2,781,019

A- to A+ 12,706,190 9,942,556
BBB- to BBB+ 1,560,127 4,919,866
Unrated 1 110,455 27,230
ņņņņņņņņņ ņņņņņņņņņ
15,646,023 17,670,671
őőőőőőőőő őőőőőőőőő

- 37 -
F-39
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 Financial risk management (Continued)

(a) Financial risk factors (Continued)

(ii) Credit risk (Continued)

Credit risk of cash and bank balances (Continued)

1 The directors monitor the exposure on unrated assets and considered that the risk
of default is minimal as these balances were mainly placed in banks located in Hong
Kong.

There has been no recent history of default in relation to these banks and financial
institutions. The ECL is close to zero.

Credit risk of trade receivables

Trade receivables mainly include receivables from lease of properties, trading of securities,
and other services. To manage this risk, the Group has policies in place to ensure that credit
terms are made to counterparties with an appropriate credit history and the management
performs ongoing credit evaluations of its counterparties. In addition, the Group has
policies in place to ensure that rental deposits are required from tenants prior to
commencement of leases, sales proceeds are received before the assignment of properties
are executed. The Group has a large number of customers and there is no concentration of
credit risk.

The Group applies the simplified approach to provide for ECL prescribed by IFRS 9, which
permits the use of the lifetime expected loss provision for all trade receivables. In view of
the sound financial position and collection history of receivables due from these
counterparties and insignificant risk of default, to measure the ECL, trade receivables have
been grouped based on shared credit risk characteristics and the days past due. A default
on trade receivable is when the counterparty fails to make contractual payments within
credit period when they fall due. The expected loss rates are based on the payment profiles
of sales and the corresponding historical credit losses experienced, adjusted with current
and forward-looking information on macroeconomic factors affecting the ability of the
customers to settle the receivables.

Trade receivables are written off, in whole or in part, when it has exhausted all practical
recovery efforts and has concluded that there is no reasonable expectation of recovery.
Indicators that there is no reasonable expectation of recovery include, amongst others, the
failure of a debtor to engage in a repayment plan within the Group, and its failure to make
contractual payments for a period. Impairment losses on trade receivables are presented as
net impairment losses within “other income and gains, net”. Subsequent recoveries of
amounts previously written off are credited against the same item.

Apart from the trade receivables with loss allowances provided disclosed in “Loss
allowances provided for trade receivables and loans and other receivables” below,
management believes that the ECL of other trade receivables is immaterial and the credit
risk inherent in the Group’s outstanding trade receivables balances due from these
counterparties is not significant.

- 38 -
F-40
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 Financial risk management (Continued)

(a) Financial risk factors (Continued)

(ii) Credit risk (Continued)

Credit risk of loans and other receivables

Loans and other receivables at the end of each of the reporting period are mainly comprised
of deposits, interest receivable, stakeholder’s account, loans receivables at amortised cost,
amounts due from fellow subsidiary companies, investee companies, non-controlling
interests, related companies, an immediate holding company, ultimate holding company,
joint ventures and associates.

The directors consider the probability of default upon initial recognition of asset and
whether there has been significant increase in credit risk on an ongoing basis during the
year. To assess whether there is a significant increase in credit risk the Group compares risk
of a default occurring on the assets as at the end of the reporting period with the risk of
default as at the date of initial recognition. Especially the following indicators are
incorporated:

x actual or expected significant adverse changes in business, financial economic

conditions that are expected to cause a significant change to the company’s or
individual’s ability to meet its obligations;
x actual or expected significant changes in the operating results of the company; and
x significant changes in the expected performance and behavior of the company or
individual, including changes in the payment status of the third party.

Over the term of the loans, the Group accounts for its credit risk by appropriately providing
for expected credit losses on a timely basis. In calculating the expected credit loss rates, the
Group considers corresponding historical credit losses of the debtors experienced, adjusted
with current and forward-looking information on macroeconomic factors affecting the
ability of the debtors to settle the receivables.

Apart from the loans and other receivables with loss allowances provided disclosed in “Loss
allowances provided for trade receivables and loans and other receivables” below,
management considers the credit risk of loans and other receivables is insignificant when
they have a low risk of default and the issuer has a strong capacity to meet its contractual
cash flow obligations in the near term, and the loss allowance recognised is therefore
limited to 12 months expected losses. In view of insignificant risk of default and credit risk
since initial recognition, management believes that the ECL of these loans and other
receivables under the 12 months expected losses method is immaterial.

- 39 -
F-41
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 Financial risk management (Continued)

(a) Financial risk factors (Continued)

(ii) Credit risk (Continued)

Loss allowances provided for trade receivables and loans and other receivables

For the year ended 31st March 2020, loss allowances of HK$59,287,000 (2019:
HK$659,000) and HK$546,985,000 (2019: write-back of provision of HK$944,000) were
provided for trade receivables and loans receivables and there is a write-back of provision
for loss allowance of other receivables of HK$76,292,000 (2019: provision of
HK$203,839,000). The amount mainly include:

1. As at 31st March 2020, the Group has trade receivables of HK$300,424,000 (net
of provision of HK$59,287,000) (2019: HK$197,331,000 (net of provision of
HK$918,000)) and unsecured loans receivables of HK$183,403,000 (2019:
HK$74,132,000). Certain trade receivables of HK$92,068,000 (2019: HK$nil) and
unsecured loans receivable at amortised cost of HK$50,404,000 (2019: HK$nil) in
Hong Kong were underperforming as at 31st March 2020, with the indicators that
there were alteration of original terms of contracts before contract renewal.
Management considered that there was a significant increase in credit risk of these
trade receivables and unsecured loans receivable compared to original expectation.
Loss allowances of HK$59,142,000 and HK$30,243,000 were provided for the
trade receivables and loans receivable at amortised cost respectively and was
recognised in profit or loss for the year ended 31st March 2020. Details of the trade
receivables and the unsecured loans receivable at amortised cost are disclosed in
note 22 and note 19 to the consolidated financial statements respectively.

2. As at 31st March 2020, the Group has secured loans receivable at amortised cost of
HK$3,268,839,000 (2019: HK$3,257,627,000). Certain secured loans receivable
of HK$706,500,000 (2019: HK$nil) were non-performing as at 31st March 2020,
with the indicators for negotiation of extension of original terms of contract which
was due in April 2020. Management considered the risk of default of these loans to
be high as at 31st March 2020. Taken into consideration that the loans receivable
was secured, loss allowances of HK$207,000,000 was provided for the secured
loans receivable at amortised cost and was recognised in profit or loss for the year
ended 31st March 2020. Details of the secured loans receivables at amortised cost
are disclosed in note 19 to the consolidated financial statements.

3. As at 31st March 2019, other receivables of RMB150 million (equivalent to HK$180

million) was in default and non-performing. Loss allowance of RMB150 million
(equivalent to HK$180 million) was provided by management. During the year
ended 31st March 2019, HK$75 million was received from the counterparty and
write-back of provision of HK$75 million was recognised.

- 40 -
F-42
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 Financial risk management (Continued)

(a) Financial risk factors (Continued)

(ii) Credit risk (Continued)

Loss allowances provided for trade receivables and loans and other receivables
(Continued)

4. As at 31st March 2020, the Group has amount due from joint venture at amortised
cost of HK$2,589 million (2019: HK$3,221 million). Certain amount due from joint
venture of RMB1,364 million (equivalent to HK$1,490 million) after provision of
RMB616 million (equivalent to HK$673 million) (31st March 2019: RMB1,844
million (equivalent to HK$2,161 million) after provision of RMB336 million
(equivalent to HK$394 million)) were non-performing as at 31st March 2020.
Management considered the risk of default of these loans to be high as at 31st
March 2020. Additional loss allowances of RMB280 million (equivalent to HK$310
million) was provided based on the estimated cashflow of management for the
amount due from joint venture at amortised cost and was recognised in profit or
loss for the year ended 31st March 2020. Details of the secured loans receivables at
amortised cost are disclosed in note 19 to the consolidated financial statements.

(iii) Interest rate risk

The Group’s main exposure to interest rate risk relates principally to the Group’s bank
deposits, bank borrowings, loans and other receivables, amounts due from joint ventures,
associates and investee companies and amounts due to non-controlling interests.

Interest rates of bank deposits, bank borrowing, loans and other receivables, amounts due
from joint ventures, associates and investee companies and amounts due to non-controlling
interests are determined based on prevailing market rates and expose the Group to cash
flow interest rate risk. The Group manages its interest rate exposure by monitoring of
interest rate movements, replacing and entering into new banking facilities when
favourable pricing opportunities arise and would consider using interest rate swap when
appropriate.

As at 31st March 2020, if interest rates increase/decrease by 50 basis points with all other
variables held constant, the Group’s pre-tax profit, before taking into account the impact of
interest capitalisation, would decrease/increase by approximately HK$7,022,000 (2019:
decrease/increase by approximately HK$1,743,000), resulting from the change in the
borrowing costs of bank borrowings and interest bearing financial liabilities, and change in
interest income from the interest bearing financial assets.

- 41 -
F-43
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 Financial risk management (Continued)

(a) Financial risk factors (Continued)

(iv) Foreign exchange risk

The Group operates mainly in Hong Kong, the PRC, the United States and United
Kingdoms, and is exposed to foreign exchange risk arising from various currency exposures
in the financial investment portfolio, primarily with respect to the United States dollar (“US
dollar”), Renminbi (“RMB”), Euro and Great British Pound (“GBP”). Foreign exchange risk
arises from future commercial transactions, recognised assets and liabilities.

The Group’s foreign currency exposures primarily arise from monetary assets and liabilities
that are denominated in a currency that is not the entity’s functional currency, where these
assets and liabilities are mainly denominated in US dollar, RMB, Euro and GBP.

In view of the fact that HK dollar is pegged to US dollar, the foreign currency exposure of
operating units with functional currency as HK dollar on US dollar transactions and
balances is minimal.

As at 31st March 2020, if US dollar/HK dollar had weakened/strengthened 2% against

RMB and Euro with all other variables held constant, the Group’s pre-tax profit would
increase/decrease by HK$28,954,000 (2019: HK$2,275,000) and HK$9,383,000 (2019:
HK$14,375,000) respectively as a result of foreign exchange gains/losses.

As at 31st March 2020, if US dollar/HK dollar had weakened/strengthened 2% against GBP

with all other variables held constant, the Group’s pre-tax profit would decrease/increase
by HK$1,811,000 (2019: decrease/increase by HK$441,000) as a result of foreign exchange
losses/gains.

(v) Liquidity risk

The Group’s cash flow management is to regularly monitor its current and expected
liquidity positions to ensure adequate funds are available for its short term and long term
requirements. In order to maintain sufficient liquidity, the Group monitors and maintains
a level of cash and cash equivalents in addition to committed credit facilities available,
which are deemed adequate by the management from time to time.

- 42 -
F-44
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 Financial risk management (Continued)

(a) Financial risk factors (Continued)

(v) Liquidity risk (Continued)

The table below analyses the Group’s financial liabilities into relevant maturity groupings
based on the remaining period at the consolidated balance sheet to the contractual maturity
date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Between Between
Less than 1 and 2 2 and 5 Over
1 year years years 5 years
HK$’000 HK$’000 HK$’000 HK$’000

At 31st March 2020

Trade and other
payables and
accruals 2,630,243 - 1,623,790 -
Amounts due to joint
ventures, associates
and investee
companies 4,677,519 - - -
Amounts due to
related companies
and individuals 493,048 - - -
Amounts due to
immediate holding
company 8,002 - - -
Amount due to
ultimate holding
company 209,610 - - -
Amounts due to non-
controlling interests 3,546,013 - - -
Financial liabilities at
fair value through
profit or loss 819,385 - - -
Lease liabilities 20,007 16,993 38,817 116,368
Bank and other
borrowings 4,493,618 5,540,578 17,138,443 10,159,430
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
16,897,445 5,557,571 18,801,050 10,275,798
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

- 43 -
F-45
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 Financial risk management (Continued)

(a) Financial risk factors (Continued)

(v) Liquidity risk (Continued)

Between Between
Less than 1 and 2 2 and 5 Over
1 year years years 5 years
HK$’000 HK$’000 HK$’000 HK$’000

At 31st March 2019

Trade and other
payables and
accruals 2,161,495 - 1,623,790 -
Amounts due to joint
ventures, associates
and investee
companies 5,098,580 - - -
Amounts due to
related companies
and individuals 594,553 - - -
Amounts due to
immediate holding
company 8,024
Amount due to
ultimate holding
company 619,742 - - -
Amounts due to non-
controlling interests 2,850,782 - - -
Financial liabilities at
fair value through
profit or loss 202,753 - - -
Bank and other
borrowings 1,532,688 3,687,123 21,590,541 12,988,602
Other long-term
liabilities - 11,163 - -
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
13,068,617 3,698,286 23,214,331 12,988,602
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

(b) Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a
going concern in order to provide returns for shareholder and to maintain an optimal capital
structure to reduce the cost of capital. The Group obtains its financing from its related companies
and individuals, immediate holding company, immediate holding company, ultimate holding
company, non-controlling interests, banks, issuance of guaranteed notes and issuance of perpetual
capital securities.

- 44 -
F-46
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 Financial risk management (Continued)

(b) Capital risk management (Continued)

The Group monitors its capital on the basis of the net debt to equity ratio. Net debt is calculated as
total bank and other borrowings (including “current and non-current bank borrowings” and
“guaranteed notes”) less cash and bank balances. The net debt to equity ratio as at 31st March 2020
and 31st March 2019 is as follows:

2020 2019
HK$’000 HK$’000

Bank borrowings 19,590,564 20,461,325

Guaranteed notes 12,618,383 12,734,145
ņņņņņņņņņņ ņņņņņņņņņņ
Total debts - interest bearing bank and other borrowings 32,208,947 33,195,470
Less: Cash and bank balances (15,646,023) (17,670,671)
ņņņņņņņņņņ ņņņņņņņņņņ
Net debt 16,562,924 15,524,799
őőőőőőőőőő őőőőőőőőőő

Equity attributable to owners of the Company and holders

of perpetual capital securities 104,849,576 105,332,225
őőőőőőőőőő őőőőőőőőőő

Net debt to equity ratio 15.80% 14.74%

őőőőőőőőőő őőőőőőőőőő

Increase in net debt to equity ratio is mainly resulted from cash outflow for acquisition of
investment properties partially offset by cash flow from joint ventures, which engaged in properties
development business.

(c) Fair value estimation

(i) Financial instruments carried at fair value

The financial instruments are measured in the consolidated balance sheet at fair value in
accordance with IFRS 13. This requires disclosure of fair value measurements by level of
the following fair value measurement hierarchy:

- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level
1).
- Inputs other than quoted prices included within level 1 that are observable for the
asset or liability, either directly (that is, as prices) or indirectly (that is, derived from
prices) (level 2).
- Inputs for the asset or liability that are not based on observable market data (that
is, unobservable inputs) (level 3).

- 45 -
F-47
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 Financial risk management (Continued)

(c) Fair value estimation (Continued)

(i) Financial instruments carried at fair value (Continued)

The following table represents the Group’s financial instruments measured at fair value:

Valuation Hierarchy
Level 1 Level 2 Level 3 Total
HK$’000 HK$’000 HK$’000 HK$’000

At 31st March 2020

Amounts due from joint
ventures at fair value
through profit or loss - - 745,691 745,691
Loans receivable at fair
value through profit or
loss - - 1,831,741 1,831,741
Financial assets at fair
value through profit or
loss
- listed 8,684,003 - - 8,684,003
- unlisted - 449,637 12,781,987 13,231,624
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
Total 8,684,003 449,637 15,359,419 24,493,059
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

Financial liabilities at fair

value through profit or
loss
- unlisted - (819,385) - (819,385)
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
Total - (819,385) - (819,385)
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

- 46 -
F-48
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 Financial risk management (Continued)

(c) Fair value estimation (Continued)

(i) Financial instruments carried at fair value (Continued)

The following table represents the Group’s financial instruments measured at fair value:
(Continued)

Valuation Hierarchy
Level 1 Level 2 Level 3 Total
HK$’000 HK$’000 HK$’000 HK$’000

At 31st March 2019

Amounts due from joint
ventures at fair value
through profit or loss - - 638,860 638,860
Loans receivable at fair
value through profit or
loss - - 2,194,047 2,194,047
Financial assets at fair
value through profit or
loss
- listed 10,310,678 - - 10,310,678
- unlisted - 117,033 11,505,335 11,622,368
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
Total 10,310,678 117,033 14,338,242 24,765,953
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

Financial liabilities at fair

value through profit or
loss
- unlisted - (202,753) - (202,753)
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
Total - (202,753) - (202,753)
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

The fair value of financial instruments traded in active markets is based on quoted market
prices at the end of the reporting period. A market is regarded as active if quoted prices are
readily and regularly available from an exchange, dealer, broker, industry group, pricing
service, or regulatory agency, and those prices represent actual and regularly occurring
market transactions on an arm’s length basis. The quoted market price used for financial
assets held by the Group is the current bid price. These instruments are included in level 1.

Unlisted investments are stated at fair values which are estimated using other prices
observed in recent transactions or valuation techniques when the market price is not readily
available. If all significant inputs required to estimate the fair value of an instrument are
observable, the instrument is included in level 2. If one or more of the significant inputs is
not based on observable market data, the instrument is included in level 3.

- 47 -
F-49
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 Financial risk management (Continued)

(c) Fair value estimation (Continued)

(i) Financial instruments carried at fair value (Continued)

Specific valuation techniques used to value financial instruments include:

- Quoted market prices or dealer quotes for similar instruments.

- The fair value of interest rate swaps is calculated as the present value of the
estimated future cash flows based on observable yield curves.
- The fair value of forward foreign exchange contracts is determined using forward
exchange rates at the balance sheet date, with the resulting value discounted back
to present value.
- Other techniques, such as discounted cash flow analysis, are used to determine fair
value for the remaining financial instruments.

As at 31st March 2020, financial assets at fair value through profit or loss of
HK$12,781,987,000 (2019: HK$11,505,335,000) are measured with valuation techniques
using significant unobservable inputs (level 3). It included private equity funds, unquoted
direct investments, fixed income fund, venture capital fund and others which represent
approximate 35%, 37%, 8%, 11% and 9% (2019: 28%, 39%, 10%, 14% and 9%) of those level
3 investments respectively.

Fair values of the unlisted funds are mainly determined based on the net asset value,
representing the fair value of the fund reported by respective fund administrators and
relevant factors if deemed necessary.

Fair values of unquoted direct investment are determined by the Group using valuation
techniques. Such valuation techniques may consider original transaction price and take
into account relevant developments since the acquisition of the investments and other
factor pertinent to the valuation of the investments, with reference to recent third party
transactions of comparable type of instruments and reliable indicative offers from potential
buyers.

The determination of fair value is subject to the valuation policies and procedures
formulated by the Group’s Investment Department and the oversight of senior
management committees. These policies and procedures facilitate the exercise of
judgement in determining the risk characteristics of various financial instruments,
discount rates, estimates of future cash flows and other factors used in the valuation process.
Judgement may also be applied in adjusting prices of less readily observable external
parameters. The management considers the appropriateness of the valuation model inputs,
as well as the valuation result using various valuation methods and techniques generally
accepted within the industry.

Details on sensitivity analysis of the Group’s financial assets at fair value through profit or
loss are set out on note 3(a)(i) to the consolidated financial statements.

There is no transfer between level 1, level 2 and 3 during the year.

- 48 -
F-50
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 Financial risk management (Continued)

(c) Fair value estimation (Continued)

(i) Financial instruments carried at fair value (Continued)

The following represents the changes in level 3 instruments for the year ended 31st March
2020:

Amounts due
from joint
ventures at Financial Loans
fair value Available- assets receivable
through for-sale at fair value at fair value
profit financial through profit through profit
or loss assets or loss or loss
HK$’000 HK$’000 HK$’000 HK$’000

At 1st April 2019 638,860 - 11,505,335 2,194,047

Additions 386,926 - 1,783,881 1,178
Repayment (280,095) - - (420,078)
Disposal - - (399,757) -
Return of capital - - (989,293) -
Fair value adjustment - - - 56,594
Unrealised gains
recognised in income
statement - - 1,022,468 -
Exchange translation
differences - - (140,647) -
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 31st March 2020 745,691 - 12,781,987 1,831,741
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

At 1st April 2018 - 9,927,842 16,783 2,530,109

Adoption of IFRS 9 583,501 (9,927,842) 9,927,842 -
Additions 189,111 - 2,467,473 -
Repayment (133,752) - - (178,334)
Disposal - - (125,568) -
Return of capital - - (1,062,897) -
Fair value adjustment - - - (157,728)
Unrealised gains
recognised in income
statement - - 291,328 -
Exchange translation
differences - - (9,626) -
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 31st March 2019 638,860 - 11,505,335 2,194,047
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

- 49 -
F-51
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 Financial risk management (Continued)

(c) Fair value estimation (Continued)

(ii) Financial instruments carried at other than fair value

The fair values of loans and other receivables at amortised cost, trade and other receivables,
deposits, cash and bank balances, short-term bank loans, trade and other payables, and the
amounts due from/to associates, joint ventures, investee companies, related companies
and individuals, fellow subsidiary companies, an immediate holding company, immediate
holding company, ultimate holding company and non-controlling interests are assumed to
approximate their carrying amounts.

4 Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.

(i) Estimate of fair value of investment properties

The fair value of investment properties is determined by using valuation technique. Details
of the judgement and assumptions have been disclosed in note 14.

(ii) Estimate of fair value of financial assets at fair value through profit or loss

The fair value of financial instruments traded in active markets is based on quoted market
prices as at the reporting date. The quoted market price used is the closing bid price as at
the reporting date. The fair values of unlisted derivatives are based on brokers’ quote and
statements. The fair value of investments in funds that are not quoted in an active market
is determined primarily by reference to the latest available net assets value for each fund as
determined by the fund administrator of such fund. The fair value of other financial
instruments that are not traded in an active market is estimated using other prices observed
in recent transactions or valuation techniques when the market price is not readily available.
The Group uses its judgement to select a variety of methods and make assumptions that are
mainly based on market conditions existing at the end of each reporting period, as detailed
in note 3(c)(i).

- 50 -
F-52
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4 Critical accounting estimates and judgements (Continued)

(iii) Estimate of impairment and net realisable values of properties for sale

Management reviews the net realisable values of properties for sale at each reporting date.
The net realisable values are the estimated selling price of the properties less costs to sell.
Management makes estimates in determining the net realisable values. Any changes to the
estimated net realisable values may cause a material adjustment to the carrying amount
and result in future financial year if the actual net realisable values of the properties for sale
are different than expected as a result of change in market condition.

In considering the net realisable values of these properties, the Group takes into account
estimated costs to completion based on past experience and committed contracts and
estimated net sales or rental value based on prevailing market conditions. Provision is made
when events or changes in circumstances indicate that the carrying amounts may not be
realised. The assessment requires the use of judgement and estimates.

(iv) Estimate of impairment of financial assets at amortised cost

The loss allowances for financial assets at amortised cost are based on assumptions about
risk of default and expected loss rates. The Group uses judgement in making these
assumptions and selecting the inputs to the impairment calculation, based on the Group’s
past history, existing market conditions as well as forward looking estimates at the end of
each reporting period. Details of the key assumptions and inputs used are disclosed in note
3(a)(ii) and note 19.

(v) Income taxes

Significant estimates are required in determining provision for income taxes of the Group.
There are many transactions and calculations for which the ultimate tax determination is
uncertain. The Group recognises liabilities for anticipated tax issues based on estimates of
whether additional taxes will be due. Where the final tax outcome of these matters is
different from the amounts that were initially recorded, such differences will impact the
current and deferred income tax provisions.

Recognition of deferred income tax asset, which principally relates to tax losses of certain
subsidiaries, depends on the management’s expectation of future taxable profit that will be
available against which the tax losses can be utilised. The outcome of their actual utilisation
may be different.

(vi) Estimated impairment of property, plant and equipment and right-of-use assets

Property, plant and equipment and right-of-use assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of the asset
exceeds its recoverable amount. An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable amount. The recoverable amount of an
asset or a cash generating unit is determined based on the higher of its fair value less cost
to sell and its value in use, calculated on the basis of management/independent
professional qualified valuer’s assumptions and estimates. Projection for a period of five to
ten years in general may be used on the basis that a longer projection period represents the
long-dated nature of the Group’s hotel properties and is more appropriate reflection of the
future cash flow generated from the hotel operations. Changing the key assumptions,
including the discount rates or the growth rate assumptions in the cash flow projections,
could materially affect the recoverable amount.

- 51 -
F-53
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4 Critical accounting estimates and judgements (Continued)

(vii) Classification of properties

The Group determines whether a property qualifies as an investment property or property

for sale. In making the judgement, the Group considers the intention of holding the
property (land or building). Property held to earn rental or for capital appreciation is
considered as investment property whereas property held for sale in the ordinary course of
business is considered as property for sale. The Group considers each property separately
in making its judgement.

5 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision-maker. The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating segments, has been identified as
the Executive Directors who make strategic decisions.

Management has determined the operating segments based on these reports and analysed from a
business perspective including subsidiaries, joint ventures and associates:

- Hong Kong properties (including construction services)

- PRC and overseas properties
- Financial investment
- Corporate, treasury and others

Segment assets consist primarily of property, plant and equipment, investment properties, right-
of-use assets, land use rights, joint ventures, associates, financial assets at fair value through profit
or loss, loans and other receivables, amounts due from investee companies, properties for sale,
trade and other receivables, deposits and prepayments and cash and bank balances. Other assets
comprise mainly prepaid tax and deferred income tax assets.

Segment liabilities comprise operating liabilities. Other liabilities include amount due to immediate
holding company, tax payable, bank and other borrowings and deferred income tax liabilities.

Capital expenditure comprises additions to non-current assets other than the financial instruments
and deferred income tax assets.

- 52 -
F-54
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5 Segment reporting (Continued)

The segment results for the year ended 31st March 2020 are as follows:

The Company and its subsidiaries Joint ventures Associates Total

Revenue
recognised Revenue Revenue
at a point recognised from other Share of Share of Share of Share of Segment Segment
in time over time sources Results revenue results revenue results revenue results
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Hong Kong properties 2,285,316 278,383 721,269 256,888 1,674,455 689,303 136,846 (165,905) 5,096,269 780,286
PRC and overseas properties 127,567 235,535 929,179 268,260 51,577 (267,063) 192,787 163,241 1,536,645 164,438
Financial investment - - 1,411,596 915,879 182 342 7,420 (13,146) 1,419,198 903,075

F-55
Corporate, treasury and others - - - (28,900) - - - - - (28,900)
ņņņņņņņņ ņņņņņņņņ ņņņņņņņņ ņņņņņņņņ ņņņņņņņņ ņņņņņņņņ ņņņņņņņņ ņņņņņņņņ ņņņņņņņņņ ņņņņņņņņ
2,412,883 513,918 3,062,044 1,412,127 1,726,214 422,582 337,053 (15,810) 8,052,112 1,818,899
őőőőőőőő őőőőőőőő őőőőőőőő őőőőőőőő őőőőőőőő őőőőőőőő őőőőőőőő őőőőőőőő őőőőőőőőő őőőőőőőő

Segment results 1,818,899

Finance income, net 680,997
ņņņņņņņņ
Profit before income tax 2,499,896
Income tax expense (217,517)
ņņņņņņņņ
Profit for the year 2,282,379
őőőőőőőő

- 53 -
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5 Segment reporting (Continued)

The segment results for the year ended 31st March 2019 are as follows:

The Company and its subsidiaries Joint ventures Associates Total

Revenue
recognised Revenue Revenue
at a point recognised from other Share of Share of Share of Share of Segment Segment
in time over time sources Results revenue results revenue results revenue results
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Hong Kong properties 10,524,883 331,574 584,194 3,446,594 4,154,465 2,042,349 647,641 431,115 16,242,757 5,920,058
PRC and overseas properties 158,897 265,779 980,201 1,045,563 18,129 (522,374) 195,088 100,203 1,618,094 623,392
Financial investment - - 686,841 189,319 314 (3,346) 5,951 (18,268) 693,106 167,705

F-56
Corporate, treasury and others - - - (36,064) - - - - - (36,064)
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
10,683,780 597,353 2,251,236 4,645,412 4,172,908 1,516,629 848,680 513,050 18,553,957 6,675,091
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

Segment results 6,675,091

Finance income, net 166,541
ņņņņņņņņņ
Profit before income tax 6,841,632
Income tax expense (584,176)
ņņņņņņņņņ
Profit for the year 6,257,456
őőőőőőőőő

- 54 -
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5 Segment reporting (Continued)

The segment assets and liabilities as at 31st March 2020 are as follows:

The Company
and its Joint
subsidiaries ventures Associates Total assets Total liabilities
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Hong Kong properties 71,798,670 8,727,207 4,802,166 85,328,043 (15,623,832)

PRC and overseas properties 35,759,684 2,499,786 2,384,203 40,643,673 (2,265,655)
Financial investment 24,550,681 2,921 32,436 24,586,038 (713,974)
Corporate, treasury and others 9,962,556 - - 9,962,556 (1,043,082)
ņņņņņņņņņņ ņņņņņņņņņņ ņņņņņņņņņņ ņņņņņņņņņņ ņņņņņņņņņņ
142,071,591 11,229,914 7,218,805 160,520,310 (19,646,543)
őőőőőőőőőő őőőőőőőőőő őőőőőőőőőő

Deferred income tax assets 269,159 -

Prepaid tax 143,740 -
Bank and other borrowings - (32,208,947)
Amount due to ultimate
holding company - (209,610)
Deferred income tax liabilities - (3,047,849)
Tax payable - (648,065)
ņņņņņņņņņņ ņņņņņņņņņņ
Consolidated total
assets/(liabilities) 160,933,209 (55,761,014)
őőőőőőőőőő őőőőőőőőőő

The segment assets and liabilities as at 31st March 2019 are as follows:

The Company
and its Joint
subsidiaries ventures Associates Total assets Total liabilities
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Hong Kong properties 70,961,636 9,080,392 5,040,008 85,082,036 (13,188,057)

PRC and overseas properties 31,754,346 2,699,486 2,281,485 36,735,317 (1,095,930)
Financial investment 24,846,498 2,610 237,688 25,086,796 (991,902)
Corporate, treasury and others 12,742,354 - - 12,742,354 (900,172)
ņņņņņņņņņņ ņņņņņņņņņņ ņņņņņņņņņņ ņņņņņņņņņņ ņņņņņņņņņņ
140,304,834 11,782,488 7,559,181 159,646,503 (16,176,061)
őőőőőőőőőő őőőőőőőőőő őőőőőőőőőő

Deferred income tax assets 234,517 -

Prepaid tax 83,580 -
Bank and other borrowings - (33,195,470)
Amount due to ultimate
holding company - (619,742)
Deferred income tax liabilities - (3,066,076)
Tax payable - (944,375)
ņņņņņņņņņņ ņņņņņņņņņņ
Consolidated total
assets/(liabilities) 159,964,600 (54,001,724)
őőőőőőőőőő őőőőőőőőőő

- 55 -
F-57
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5 Segment reporting (Continued)

The Group’s depreciation and amortisation and additions to non-current assets other than financial
instruments and deferred income tax assets are as follows:

Depreciation and amortisation Additions to non-current assets

For the year ended 31st March For the year ended 31st March
2020 2019 2020 2019
HK$’000 HK$’000 HK$’000 HK$’000

Hong Kong properties 94,301 84,558 2,146,964 2,146,485

PRC and overseas properties 78,522 83,677 5,290,579 220,135
Financial investment 7,198 295 58,049 833
Corporate, treasury and others 10,983 1,292 42,168 11,987
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
191,004 169,822 7,537,760 2,379,440
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

The following is an analysis of the Group’s revenue by geographical areas in which the
customer/operations are located, irrespective of the origin of the goods/services:

For the year For the year

ended ended
31st March 31st March
2020 2019
HK$’000 HK$’000

Hong Kong 4,696,565 12,127,492

The PRC 1,091,595 1,168,117
Overseas 200,685 236,760
ņņņņņņņņņ ņņņņņņņņņ
5,988,845 13,532,369
őőőőőőőőő őőőőőőőőő

The following is an analysis of the Group’s non-current assets other than financial instruments and
deferred income tax assets by areas in which the business operations/assets are located.

As at As at
31st March 31st March
2020 2019
HK$’000 HK$’000

Hong Kong 54,338,334 58,072,686

The PRC 26,154,405 24,859,599
Overseas 8,693,505 6,666,776
ņņņņņņņņņ ņņņņņņņņņ
89,186,244 89,599,061
őőőőőőőőő őőőőőőőőő

- 56 -
F-58
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

6 Revenue

2020 2019
HK$’000 HK$’000

Sale of properties 2,218,948 10,450,547

Gross rental income 1,561,398 1,537,279
Construction revenue 7,846 11,335
Hotel revenue 410,794 536,640
Property management fee income 289,214 282,611
Dividend income from investments 1,318,016 513,543
Interest income from debt and convertible securities and
loans receivable classified as financial assets at fair value
through profit or loss 182,629 200,414
ņņņņņņņņņ ņņņņņņņņņ
5,988,845 13,532,369
őőőőőőőőő őőőőőőőőő

7 Other income and (losses)/gains, net

2020 2019
HK$’000 HK$’000

Net gain/(loss) on financial assets at fair value through

profit or loss (note (a)) 53,674 (320,945)
Unrealised gain/(loss) on loans receivable at fair value
through profit or loss (note 19(c)) 56,594 (157,728)
Net (loss)/gain on derivatives (note (b)) (1,971) 207,974
Net (loss)/gain on disposal/liquidation of subsidiaries (28,843) 982,070
Net gain on disposal of property, plant and equipment 397 1,430
Net gain on disposal of investment properties (note (c)) - 170,418
Net provision for loss allowances of financial assets
(note (d)) (529,980) (203,554)
Net exchange (loss)/gain (208,509) 33,457
Others 204,573 242,111
ņņņņņņņņņ ņņņņņņņņņ
(454,065) 955,233
őőőőőőőőő őőőőőőőőő

Notes:

(a) The amount comprised realised gain of HK$246,406,000 (2019: HK$54,840,000) and
unrealised loss of HK$192,732,000 (2019: HK$375,785,000) on financial assets at fair
value through profit or loss.

(b) The amount comprised realised gain of HK$281,605,000 (2019: HK$283,551,000) and
unrealised loss of HK$283,576,000 (2019: HK$75,577,000) on derivatives.

(c) The amount represented net disposal gain of investment properties with total consideration
amounted to HK$399,821,000 less cost of properties sold of HK$229,403,000 (including
net fair value gain of investment properties recognised in previous years of HK$86,799,000)
for the year ended 31st March 2019.

- 57 -
F-59
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7 Other income and (losses)/gains, net (Continued)

Notes: (Continued)

(d) The amount comprised net provision for loss allowances of trade receivables of
HK$59,287,000 (2019: HK$659,000) and loans receivables of HK$546,985,000 (2019:
write-back of provision of HK$944,000). The amount also comprised a write-back of
provision for loss allowances of other receivables of HK$76,292,000 (2019: provision of
HK$203,839,000).

8 Operating profit

Operating profit is arrived at after charging/(crediting):

2020 2019
HK$’000 HK$’000

Cost of properties sold 1,381,995 8,476,408

(Write-back)/cost of construction works (14,178) 27,403
Hotel direct costs 183,055 217,253
Outgoings in respect of rental income 306,168 296,367
Depreciation and amortisation of
- property, plant and equipment (note 13) 149,076 156,849
- right-of-use assets - leasehold land and land use right 31,021 -
- right-of-use assets - buildings 10,907 -
- land use rights (note 16) - 12,973
Staff costs (note 9) 909,200 725,438
Marketing and selling expenses 170,490 141,806
Short-term and low-value leases expenses 21,788 -
Rental expense under operating lease - 24,352
őőőőőőőő őőőőőőőő

9 Staff costs and key management compensation

2020 2019
HK$’000 HK$’000

Staff costs
- wages, salaries and allowances and benefits in kind 1,068,804 1,052,483
- retirement benefit costs - defined contribution schemes 25,475 41,308
ņņņņņņņņ ņņņņņņņņ
Total staff costs incurred for the year 1,094,279 1,093,791
Less: amount capitalised to investment properties and
properties for sale under development (185,079) (368,353)
ņņņņņņņņ ņņņņņņņņ
Amount directly charged to the consolidated income
statement 909,200 725,438
őőőőőőőő őőőőőőőő

Including:
Key management compensation
- wages, salaries and allowances and benefits in kind 214,254 198,840
- retirement benefit costs - defined contribution schemes 2,350 1,398
ņņņņņņņņ ņņņņņņņņ
Total key management compensation incurred for the year 216,604 200,238
őőőőőőőő őőőőőőőő
- 58 -
F-60
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

10 Finance income, net

2020 2019
HK$’000 HK$’000

Interest income on
- amount due from
- joint ventures 31,417 37,220
- associates 111,119 96,127
- investee company 1,157 1,078
- bank deposits 400,878 260,063
- loans and other receivables 263,838 135,549
- others 29,428 16,801
ņņņņņņņņņņ ņņņņņņņņņņ
837,837 546,838
---------------- ----------------

Interest expenses on
- bank borrowings (572,581) (687,256)
- guaranteed notes (545,939) (462,107)
- amount due to non-controlling interest (86,768) (87,900)
- lease liabilities (4,374) -
- others (6,456) (5,836)
ņņņņņņņņņņ ņņņņņņņņņņ
Total finance costs incurred (1,216,118) (1,243,099)
Less: amount capitalised to investment properties and
properties for sale under development 914,952 921,790
ņņņņņņņņņņ ņņņņņņņņņņ
Total finance costs expensed during the year (301,166) (321,309)
---------------- ----------------

Interest income, net 536,671 225,529

Other finance charges (38,573) (54,049)
Net exchange gain/(loss) on financing activities 182,899 (4,939)
ņņņņņņņņņņ ņņņņņņņņņņ
Finance income, net 680,997 166,541
őőőőőőőőőő őőőőőőőőőő

The weighted average capitalised interest rate applied to general borrowings used for the
investment properties and properties for sale under development is 3.89% (2019: 3.48%) per
annum.

11 Income tax expense

Hong Kong profits tax has been provided at the rate of 16.5% (2019: 16.5%) on the estimated
assessable profits for the year. Subsidiaries established and operated in the PRC are subject to
corporate income tax at the rate of 25% (2019: 25%). Taxation on overseas profits has been
calculated on the estimated assessable profits for the year at the rates of taxation prevailing in the
countries in which the Group operates.

- 59 -
F-61
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11 Income tax expense (Continued)

Withholding tax is levied on profit distribution or dividend income upon declaration or remittance
at the rates of taxation prevailing in the PRC and overseas countries.

The amount of income tax charged/(credited) to the consolidated income statement represents:

2020 2019
HK$’000 HK$’000

Current income tax

Hong Kong profits tax
- provision for current year 124,385 431,125
- over provision in prior years (98,062) (386)
PRC income tax
- provision for current year 6,239 3,088
- under provision in prior years - 52
Overseas profits tax
- provision for current year 35,848 6,505
- (over)/under provision in prior years (539) 2,166
Withholding tax 21,693 31,028
Deferred income tax (note 28) 127,953 110,598
ņņņņņņņņ ņņņņņņņņņ
217,517 584,176
őőőőőőőő őőőőőőőőő

The tax on the Group’s profit before income tax differs from the theoretical amount that would arise
using the tax rate of Hong Kong, the principal place where the Group operates, as follows:

2020 2019
HK$’000 HK$’000

Profit before income tax 2,499,896 6,841,632

Less: share of results of
- joint ventures (422,582) (1,516,629)
- associates 15,810 (513,050)
ņņņņņņņņņ ņņņņņņņņņ
2,093,124 4,811,953
ņņņņņņņņņ ņņņņņņņņņ

Calculated at a tax rate of 16.5% (2019: 16.5%) 345,365 793,972

Effect of different tax rates in other countries 39,596 64,606
Income not subject to tax (907,368) (809,235)
Expenses not deductible for tax purposes 508,674 440,168
(Over)/under provision in prior years (98,601) 1,832
Withholding tax 21,693 31,028
Tax losses not recognised 339,083 77,072
Others (30,925) (15,267)
ņņņņņņņņņ ņņņņņņņņņ
Income tax expense 217,517 584,176
őőőőőőőőő őőőőőőőőő

- 60 -
F-62
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11 Income tax expense (Continued)

The Group’s share of income tax expense of joint ventures and associates for the year ended 31st
March 2020 totalling HK$186,790,000 (2019: HK$368,623,000) is included in the consolidated
income statement as share of results of joint ventures and associates.

Deferred income tax assets are recognised for tax loss carried forwards and deductible temporary
differences to the extent that realisation of the related tax benefit through future taxable profits is
probable. As at 31st March 2020, the Group has unrecognised tax losses of HK$3,546,748,000
(2019: HK$2,216,795,000) to carry forward against future taxable profits. Unrecognised tax losses
of HK$2,577,582,000 as at 31st March 2020 (2019: HK$728,870,000) have no expiry date and the
remaining losses will expire at various dates up to and including 2024 (2019: 2023).

12 Dividends

2020 2019
HK$’000 HK$’000

Dividend paid of HK$0.0145 per share (2019: HK$nil) 909,781 -

őőőőőőő őőőőőőő

On 2nd April 2020, the directors of the Company resolved that a dividend of HK$0.17 per share,
totalling HK$1,084,020,000 to be paid on 20th April 2020. The aggregated amount is not
recognised as a liability as at 31st March 2020.

13 Property, plant and equipment

Furniture,
fixture,
equipment
Land and and motor
building vehicles Total
HK$’000 HK$’000 HK$’000

At 1st April 2018

Cost 3,099,179 808,747 3,907,926
Accumulated depreciation (409,912) (398,403) (808,315)
ņņņņņņņņ ņņņņņņņņ ņņņņņņņņ
Net book amount 2,689,267 410,344 3,099,611
őőőőőőőő őőőőőőőő őőőőőőőő

Year ended 31st March 2019

Opening net book amount 2,689,267 410,344 3,099,611
Additions - 47,793 47,793
Disposals, cost adjustment and write-off - (10,881) (10,881)
Charge for the year (85,312) (71,537) (156,849)
Exchange difference (86,221) (15,239) (101,460)
ņņņņņņņņ ņņņņņņņņ ņņņņņņņņ
Closing net book amount 2,517,734 360,480 2,878,214
őőőőőőőő őőőőőőőő őőőőőőőő

- 61 -
F-63
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

13 Property, plant and equipment (Continued)

Furniture,
fixture,
equipment
Land and and motor
building vehicles Total
HK$’000 HK$’000 HK$’000

At 31st March 2019

Cost 3,001,239 784,265 3,785,504
Accumulated depreciation (483,505) (423,785) (907,290)
ņņņņņņņņ ņņņņņņņņ ņņņņņņņņ
Net book amount 2,517,734 360,480 2,878,214
őőőőőőőő őőőőőőőő őőőőőőőő

Year ended 31st March 2020

Opening net book amount 2,517,734 360,480 2,878,214
Adoption of IFRS 16 (note 2(a)(i)) (548,867) - (548,867)
ņņņņņņņņ ņņņņņņņņ ņņņņņņņņ
At 1st April 1,968,867 360,480 2,329,347
Additions - 76,992 76,992
Disposals, impairment and write-off (4,091) (749) (4,840)
Charge for the year (71,760) (77,316) (149,076)
Exchange difference (40,905) (17,738) (58,643)
ņņņņņņņņ ņņņņņņņņ ņņņņņņņņ
Closing net book amount 1,852,111 341,669 2,193,780
őőőőőőőő őőőőőőőő őőőőőőőő

At 31st March 2020

Cost 2,279,086 801,981 3,081,067
Accumulated depreciation (426,975) (460,312) (887,287)
ņņņņņņņņ ņņņņņņņņ ņņņņņņņņ
Net book amount 1,852,111 341,669 2,193,780
őőőőőőőő őőőőőőőő őőőőőőőő

14 Investment properties

2020 2019
HK$’000 HK$’000

Completed investment properties 42,148,077 41,595,499

Investment properties under development 32,328,888 28,181,280
ņņņņņņņņņ ņņņņņņņņņ
Total 74,476,965 69,776,779
őőőőőőőőő őőőőőőőőő

- 62 -
F-64
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14 Investment properties (Continued)

Hong Kong Overseas Hong Kong Overseas PRC

residential residential commercial commercial commercial Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1st April 2019 4,837,599 472,088 37,846,000 6,055,664 20,565,428 69,776,779

Adoption of IFRS 16
(note 2(a)(i)) - - - - 156,323 156,323
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 1st April 2019, as 4,837,599 472,088 37,846,000 6,055,664 20,721,751 69,933,102
restated
Additions 5,061 - 2,134,925 1,767,169 2,777,299 6,684,454
Net change in fair values (32,860) (11,160) (349,125) 56,878 (81,174) (417,441)
Exchange differences - (30,273) - (403,131) (1,289,746) (1,723,150)
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 31st March 2020 4,809,800 430,655 39,631,800 7,476,580 22,128,130 74,476,965
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

At 1st April 2018 4,376,750 503,629 42,489,850 6,509,512 21,637,857 75,517,598

Additions 321,041 - 1,801,427 93,820 50,047 2,266,335
Net change in fair values 139,808 (549) 64,723 239,463 314,851 758,296
Disposal - (9,115) (6,510,000) - - (6,519,115)
Transfer to assets classified
as held-for-sale (note 25) - - - (348,280) - (348,280)
Exchange differences - (21,877) - (438,851) (1,437,327) (1,898,055)
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 31st March 2019 4,837,599 472,088 37,846,000 6,055,664 20,565,428 69,776,779
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

The Group’s investment properties at their carrying amounts are analysed as follows:

2020 2019
HK$’000 HK$’000

In Hong Kong, held on leases of

between 10 to 50 years 41,741,600 40,283,599
over 50 years 2,700,000 2,400,000
ņņņņņņņņņņ ņņņņņņņņņņ
44,441,600 42,683,599
---------------- ----------------

In the PRC and overseas

Freehold 7,904,188 6,524,193
Leases of between 10 to 50 years 22,128,130 20,565,427
Leases over 50 years 3,047 3,560
ņņņņņņņņņņ ņņņņņņņņņņ
30,035,365 27,093,180
---------------- ----------------

74,476,965 69,776,779
őőőőőőőőőő őőőőőőőőőő

- 63 -
F-65
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14 Investment properties (Continued)

Leasing arrangements

The investment properties are leased to tenants under operating leases.

Risk management strategy on leases of investment properties are set out in note 3(a)(ii).

Minimum lease payments receivable on leases of investment properties are set out in note 34. None
of the leases include significant variable rentals.

Valuation processes of the Group

As at 31st March 2020, the Group’s investment properties were valued by independent professional
valuers - Knight Frank Petty Limited, Savills and DTZ Cushman & Wakefield.

Fair value of the Group’s investment properties are categorised as level 3 measurement in the three-
level fair value hierarchy. During the year, there is no transfer between level 1, level 2 and level 3.

The Group’s finance department reviews the valuations performed by the independent valuers and
report directly to senior management of the Group. Discussion of valuation processes and results
are held between the management and valuers at least once every six months, in line with the
Group’s interim and annual report dates. At each financial year end, the Finance and Project
Development Departments:

- verify all major inputs to the independent valuation report;

- assess property valuation movements when compared to the prior year valuation report;
and
- hold discussions with the independent valuer.

Valuation techniques

Fair values of investment properties in Hong Kong, the PRC and overseas are generally derived
using the income capitalisation method and wherever appropriate, by direct comparison method.
Income capitalisation method is based on the capitalisation of the net income and reversionary
income potential by adopting appropriate capitalisation rates, which are derived from analysis of
sale transactions and valuers’ interpretation of prevailing investor requirements or expectations.

The prevailing market rents adopted in the valuation have reference to recent lettings, within the
subject properties and other comparable properties. Direct comparison method is based on
comparing the property to be valued directly with other comparable properties, which have recently
transacted. However, given the heterogeneous nature of real estate properties, appropriate
adjustments are usually required to allow for any qualitative differences that may affect the price
likely to be achieved by the property under consideration.

Fair values of certain completed investment properties in the PRC are derived using the discounted
cash flow method, or a combination of discounted cash flow method and income capitalisation
method or direct comparison method. The net present value of the income stream is estimated by
applying an appropriate discount rate which reflects the risk profile.

- 64 -
F-66
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14 Investment properties (Continued)

Valuation techniques (Continued)

Fair values of properties under development in Hong Kong and properties under redevelopment in
overseas are generally derived using the residual method. This valuation method is essentially a
means of valuing the completed properties by reference to its development potential by deducting
estimated development costs together with developer’s profit and risk from the estimated capital
value of the proposed development assuming completed as at the date of valuation.

Significant unobservable inputs used to determine fair value

Capitalisation rates are estimated by valuers based on the risk profile of the investment properties
being valued. The higher the rates, the lower the fair value. As at 31st March 2020, capitalisation
rates of 2.0% to 4.8% (2019: 2.0% to 4.8%), 3.8% to 5.3% (2019: 3.8% to 5.3%) and 2.5% to 4.6%
(2019: 4.3% to 5.3%) are used for investment properties in Hong Kong, PRC and overseas
respectively in the income capitalisation method.

Discount rates are estimated by valuers based on the risk profile of the investment properties being
valued. The higher the rates, the lower the fair value. As at 31st March 2020, discount rates of 5.0%
to 7.8% (2019: 5.0% to 7.8%) are used for investment properties in the PRC in the discounted cash
flow method.

Prevailing market rents are estimated based on valuers’ view of recent lettings, within the subject
properties and other comparable properties. The lower the rents, the lower the fair value. As at 31st
March 2020, rental value of HK$11 to HK$157 (2019: HK$12 to HK$165) per square feet per month,
HK$6 to HK$97 (2019: HK$6 to HK$93) per square feet per month and HK$40 to HK$68 (2019:
HK$52 to HK$73) per square feet per month are used for Hong Kong, PRC and overseas
respectively.

Estimated costs to completion, developer’s profit and risk margins of 5% to 15% (2019: 5% to 15%)
required are estimated by valuers based on market conditions as at 31st March 2020 for investment
properties under development. The estimates are largely consistent with the budgets developed
internally by the Group based on management’s experience and knowledge of market conditions.
The higher the costs and the margins, the lower the fair value.

15 Right-of-use assets

As at As at
31st March 1st April
2020 2019*
HK$’000 HK$’000

Leasehold land and land-use right 835,951 918,087

Buildings 54,517 23,223
ņņņņņņņņņņ ņņņņņņņņņņ
890,468 941,310
őőőőőőőőőő őőőőőőőőőő

* Balances were recognised and reclassified according to IFRS16. Details are disclosed in note (2)(a).

The Group obtains right to control the use of land-use right and various land and buildings for a
period of time through lease arrangements. Lease arrangements for buildings are negotiated on an
individual basis and obtain a wide range of different terms and conditions including lease payments
and lease terms ranging from 2 to 7 years. The lease agreements do not impose any covenants other
than the security interests in the leased assets that are held by the lessor.
- 65 -
F-67
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

15 Right-of-use assets (Continued)

During the year ended 31st March 2020, additions to the right-of-use assets and lease liabilities
were HK$42,786,000. The total cash outflow for leases was HK$37,800,000 for the year ended 31st
March 2020.

16 Land use rights

2020 2019
HK$’000 HK$’000

Opening net book amount 369,220 409,333

Adoption of IFRS 16 (note 2(a)(i)) (369,220) -
Amortisation - (12,973)
Exchange differences - (27,140)
ņņņņņņņņ ņņņņņņņņ
Closing net book amount - 369,220
őőőőőőőő őőőőőőőő

The Group’s land use rights represent prepaid operating lease payments and their net book values.
The land use rights were held on leases between 10 to 50 years in the PRC.

17 Joint ventures

2020 2019
HK$’000 HK$’000

Share of net assets 8,200,649 7,922,608

Amounts due from joint ventures at amortised cost
(note 2(a)(i) and note 19 (d)) - 3,221,020
Amounts due from joint ventures at fair value through
profit or loss (note 2(a)(i) and note 19 (e)) - 638,860
ņņņņņņņņņ ņņņņņņņņņ
8,200,649 11,782,488
Amounts due within one year included in current assets
(note 2(a)(i) and note 19 (d) & (e) and note 22) - (2,455,994)
ņņņņņņņņņ ņņņņņņņņņ
8,200,649 9,326,494
őőőőőőőőő őőőőőőőőő

Amounts due to joint ventures (note 30) (4,542,509) (4,026,223)

őőőőőőőőő őőőőőőőőő

Details of the principal joint ventures as at 31st March 2020 are shown in note 38 to the
consolidated financial statements.

The financial information below, after making adjustments to conform to the Group’s significant
accounting policies, represents the Group’s interest in respective joint ventures. Management
considers there are no material joint ventures to the Group.

- 66 -
F-68
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

17 Joint ventures (Continued)

Non- Non-
current Current current Current Profit after
assets assets liabilities liabilities Revenue income tax
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

2020 5,249,728 8,139,361 (3,544,135) (1,644,305) 1,726,214 422,582

őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

2019 2,236,956 8,666,978 (1,190,707) (1,790,619) 4,172,908 1,516,629

őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

18 Associates

2020 2019
HK$’000 HK$’000

Share of net assets 3,424,382 3,993,154

Amounts due from associates at amortised cost (note 2(a)(i)
and note 19 (f)) - 3,566,027
ņņņņņņņņņ ņņņņņņņņņ
3,424,382 7,559,181
Amounts due within one year included in current assets
(note 2(a)(i) and note 22) - (310,827)
ņņņņņņņņņ ņņņņņņņņņ
3,424,382 7,248,354
őőőőőőőőő őőőőőőőőő

Amount due to associates (note 30) (125,892) (1,063,239)

őőőőőőőőő őőőőőőőőő

Details of the principal associates as at 31st March 2020 are shown in note 38 to the consolidated
financial statements.

The financial information below, after making adjustments to conform to the Group’s significant
accounting policies, represents the Group’s interest in respective associates. Management considers
there are no material associates to the Group.

Non- Non- Profit

current Current current Current after
assets assets liabilities liabilities Revenue income tax
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

2020 7,721,244 1,761,276 (5,267,013) (791,125) 337,053 (15,810)

őőőőőőőő őőőőőőőő őőőőőőőő őőőőőőőő őőőőőőőő őőőőőőőő

2019 7,552,247 1,953,351 (4,376,828) (1,135,616) 848,680 513,050

őőőőőőőő őőőőőőőő őőőőőőőő őőőőőőőő őőőőőőőő őőőőőőőő

- 67 -
F-69
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

19 Loans and other receivables

2020 2019
HK$’000 HK$’000

Loans receivable at amortised cost

- secured loans (note (a)) 3,152,022 3,257,627
- unsecured loans (note (b)) 137,369 51,024
Loans receivable at fair value through profit or loss
(note (c)) 1,831,741 2,194,047
Amounts due from joint ventures
- at amortised cost (note (d)) 2,283,574 -
- at fair value through profit or loss (note (e)) 745,691 -
Amounts due from associates at amortised cost (note (f)) 3,794,423 -
Other receivables (note 32 (b)(iii)) 813,191 -
ņņņņņņņņņ ņņņņņņņņņ
12,758,011 5,502,698
Less: current portion of
loans receivable
- at amortised cost (note 22) (1,275,840) (1,381,573)
- at fair value through profit or loss (note 22) (88,770) (43,425)
amounts due from joint ventures (note (d) and note 22) (306,926) -
amounts due from associates (note 22) (380,023) -
ņņņņņņņņņ ņņņņņņņņņ
10,706,452 4,077,700
őőőőőőőőő őőőőőőőőő

Notes:

(a) The balance mainly includes an amount of HK$1,875,000,000 (2019: HK$1,875,000,000)

which carries interest at prevailing market rate and is repayable in June 2022; an amount
of HK$499,500,000 (2019: HK$nil) after provision of HK$207,000,000 (2019: HK$nil),
which carries interest at 10% (2019: HK$nil) per annum and was repayable in April 2020;
and an amount of HK$775,450,000 (2019: HK$784,985,000) which carries interest at
12.5% (2019: 12%) per annum and was originally repayable in May 2020 and the maturity
date was subsequently extended for six months to November 2020. The balances are
denominated in the following currencies:

2020 2019
HK$’000 HK$’000

HK dollar 2,374,500 1,875,000

US dollar 777,522 1,382,627
ņņņņņņņņņ ņņņņņņņņņ
3,152,022 3,257,627
őőőőőőőőő őőőőőőőőő

- 68 -
F-70
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

19 Loans and other receivables (Continued)

Notes: (Continued)

(b) The balance includes an amount of HK$20,161,000 (2019: HK$51,024,000) after provision
of HK$30,243,000 (2019: HK$nil), which carries interest at prevailing market rate and is
repayable in June 2023, an amount of HK$116,318,000 (2019: HK$nil) which carries
interest at 12% (2019: HK$nil) per annum and is repayable in July 2029 and an amount of
HK$890,000 (2019: HK$nil) which is interest free and repayable on February 2021. The
balances are denominated in the following currencies:

2020 2019
HK$’000 HK$’000

HK dollar 890 -
US dollar 136,479 51,024
ņņņņņņņņņ ņņņņņņņņņ
137,369 51,024
őőőőőőőőő őőőőőőőőő

(c) As at 31st March 2020, loans receivable at fair value through profit or loss are interest free
for the initial two or three years and subsequently bear interest at variable interest rate. The
fair value is calculated based on cash flows discounted using prevailing market rates and
the repayment date estimated by the Group. Interest income from the loans receivable at
fair value through profit or loss of HK$41,816,000 (2019: HK$23,105,000) and unrealised
gain on loans receivable of HK$56,594,000 (2019: loss of HK$157,728,000) (note 7) are
recognised in the consolidated income statement.

(d) Included in the amounts due from joint ventures is a loan facility of RMB2,500 million
(equivalent to HK$2,751 million) granted to a PRC property developer (“Borrower”) for a
residential and commercial property development project in Foshan.

As at 31st March 2019, total outstanding balance was RMB1,844 million (equivalent to
HK$2,161 million) after provision of RMB336 million (equivalent to HK$394 million).
During the year ended 31st March 2020, RMB200 million (equivalent to HK$218 million)
was received.

On 28th May 2020, the Group has signed a term sheet (the “Term Sheet”) with the
Borrower which outlined a repayment plan and schedule with last repayment on 31st
December 2021. According to the Term Sheet, the loan will be additionally secured by
pledges of shares of a PRC company which held a piece of land in the PRC.

Present value of expected repayment is not sufficient to cover the outstanding loan balance.
As a result, additional provision of RMB280 million (equivalent to HK$310 million) was
made during the year, resulting a total net loan receivable balance of RMB1,364 million
(equivalent to HK$1,490 million) as at 31st March 2020.

Subsequent to year end, RMB25 million (equivalent to HK$27 million) scheduled

repayment was further received, total net loan receivable balance reduced to RMB1,339
million (equivalent to HK$1,463 million).

- 69 -
F-71
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

19 Loans and other receivables (Continued)

Notes: (Continued)

(d) (Continued)

As at 31st March 2020, except for HK$306,945,000 (2019: HK$752,254,000) which is

interest free, an amount of HK$486,556,000 (2019: HK$307,641,000) carries interest at
4.25% (2019: 3.5%) per annum. The balances are unsecured and have no fixed term of
repayment.

The balance are denominated in the following currencies:

2020 2019*
HK$’000 HK$’000

HK dollar 551,660 587,558

RMB 1,731,914 2,384,131
US dollar - 249,331
ņņņņņņņņņ ņņņņņņņņņ
2,283,574 3,221,020
őőőőőőőőő őőőőőőőőő

* Balances were classified as joint ventures (note 17). Details are disclosed in note 2(a)(i).

(e) The fair value of amounts due from joint ventures at fair value through profit or loss is
determined based on cash flows discounted using prevailing market rates and the
repayment date estimated by the Group.

The balance includes an amount of HK$322,656,000 (2019: HK$175,729,000) which

carries interest at prevailing market rates and an amount of HK$423,035,000 (2019:
HK$463,131,000) which carries interest at fixed rate ranged from 2.9% to 2.95% (2019:
2.2%) per annum. For comparative figures, please refer to note 17.

(f) As at 31st March 2020, except for HK$378,487,000 (2019: HK$309,309,000) which is
interest free, HK$1,536,000 (2019: HK$1,518,000) and HK$3,414,400,000 (2019:
HK$3,255,200,000) bear interest at prevailing market rate and fixed rate of 3.3% (2019:
3.2%) per annum respectively. The balances are unsecured, have no fixed term of
repayment and mainly denominated in HK dollar.

- 70 -
F-72
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

20 Amounts due from/to investee companies

2020 2019
HK$’000 HK$’000

Amounts due from investee companies (note (a)) 48,082 45,939

Amounts due within one year included in current assets
(note 22) (504) (504)
ņņņņņņņņņ ņņņņņņņņņ
47,578 45,435
őőőőőőőőő őőőőőőőőő

Amounts due to investee companies (note (b) and note 30) 9,118 9,118
őőőőőőőőő őőőőőőőőő

Notes:

(a) As at 31st March 2020, the amounts due from investee companies of HK$44,737,000 (2019:
HK$42,699,000) bear interest at prevailing market rates and have no fixed terms of
repayment. The remaining balance of HK$3,345,000 (2019: HK$3,240,000) (net of
provision for loss allowance of HK$234,357,000 (2019: HK$234,462,000)) are interest
free. The balances are unsecured and denominated in HK dollar.

(b) The amounts due to investee companies are unsecured, interest free and has no fixed term
of repayment. The balances are denominated in HK dollar.

21 Properties for sale

2020 2019
HK$’000 HK$’000

Completed properties 8,521,698 9,958,648

Under development 6,696,027 5,457,254
ņņņņņņņņņ ņņņņņņņņņ
15,217,725 15,415,902
őőőőőőőőő őőőőőőőőő

The carrying value of properties for sale comprised:

In Hong Kong
- leases of between 10 to 50 years 13,355,164 13,369,399
- leases of over 50 years 1,855,790 1,855,790

In the PRC and overseas

- leases of between 10 to 50 years - 181,345
- leases of over 50 years 6,771 9,368
ņņņņņņņņņ ņņņņņņņņņ
15,217,725 15,415,902
őőőőőőőőő őőőőőőőőő

As at 31st March 2020, properties under development of HK$3,589,936,000 (2019:

HK$5,457,254,000) are not expected to be recovered within 12 months.

- 71 -
F-73
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

22 Trade and other receivables, deposits and prepayments

2020 2019
HK$’000 HK$’000

Trade receivables (notes (a)) 359,711 198,249

Less: Provision for loss allowance of trade receivables (59,287) (918)
ņņņņņņņņņ ņņņņņņņņņ
Trade receivables, net of provision (notes (b)) 300,424 197,331
Other receivables and deposits (note (b)) 3,067,262 2,842,072
Interest receivable (note (b)) 85,911 97,772
Stakeholder’s account 835,974 1,859,055
Prepayments 127,565 103,032
Contract cost assets 239,773 96,603
Loans receivable at amortised cost (note 19) 1,275,840 1,381,573
Loans receivable at fair value through profit or loss (note 19) 88,770 43,425
Amounts due from fellow subsidiary companies (note (c)) 10,109 6,947
Amounts due from joint ventures (note 19) 306,926 2,455,994
Amounts due from associates (note 19) 380,023 310,827
Amounts due from investee companies (note 20) 504 504
Amounts due from non-controlling interests (note (d)) 93,292 93,292
Amounts due from related companies (note (e)) 3,956 22,949
Amount due from an immediate holding company
(note (f)) 652,305 1,037,354
Amount due from ultimate holding company (note (g)) 7,657 7,678
ņņņņņņņņņ ņņņņņņņņņ
7,476,291 10,556,408
őőőőőőőőő őőőőőőőőő

Notes:

(a) The Group applies the IFRS 9 simplified approach to measure expected credit losses which
use a lifetime expected credit loss allowance for all trade receivables.

The Group has different credit policies for different business operations depending on the
requirements of the markets and business in which the subsidiaries operate. The analysis
of trade receivables is as follows:

2020 2019
HK$’000 HK$’000

Fully performing 262,823 181,847

Under performing 96,888 16,402
ņņņņņņņņ ņņņņņņņņ
359,711 198,249
őőőőőőőő őőőőőőőő

- 72 -
F-74
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

22 Trade and other receivables, deposits and prepayments (Continued)

Notes: (Continued)

(a) (Continued)

Movement in the loss allowance for trade debtors during the year is as follows:

2020 2019
HK$’000 HK$’000

As at the beginning of the year 918 33,038

Impairment loss recognised during the year 59,287 659
Uncollectible amount write off (918) (32,779)
ņņņņņņņņ ņņņņņņņņ
As at the end of the year 59,287 918
őőőőőőőő őőőőőőőő

(b) Other classes within trade and other receivables, deposits and prepayments do not contain
material impaired assets. There is no concentration of credit risk with respect to trade
receivables as the customers bases are widely dispersed in different business operations.

The trade receivables, other receivables and deposits and interest receivable are
denominated in the following currencies:

2020 2019
HK$’000 HK$’000

HK dollar 3,037,702 2,704,027

US dollar 90,534 147,454
RMB 163,042 151,154
GBP 125,382 129,329
Others 36,937 5,211
ņņņņņņņņ ņņņņņņņņ
3,453,597 3,137,175
őőőőőőőő őőőőőőőő

(c) Amounts due from fellow subsidiary companies are unsecured, interest free and have no
fixed terms of repayment. The balances are denominated in HK dollar.

(d) The balances are unsecured, interest free and have no fixed terms of repayment. The
balances are denominated in HK dollar.

The amounts due from non-controlling interests are fully performing and none of them are
impaired.

- 73 -
F-75
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

22 Trade and other receivables, deposits and prepayments (Continued)

Notes: (Continued)

(e) The balances are unsecured, interest free and have no fixed terms of repayment. The
balances are denominated in the following currencies:

2020 2019
HK$’000 HK$’000

HK dollar 3,956 10,399

US dollar - 12,550
ņņņņņņņņ ņņņņņņņņ
3,956 22,949
őőőőőőőő őőőőőőőő

(f) Amount due from an immediate holding company is unsecured, interest free and have no
fixed terms of repayment. The balance is denominated in HK dollar.

(g) The balances are unsecured, interest free and have no fixed terms of repayment. The
balances are denominated in the following currencies:

2020 2019
HK$’000 HK$’000

HK dollar 7,331 7,336

GBP 326 342
ņņņņņņņņ ņņņņņņņņ
7,657 7,678
őőőőőőőő őőőőőőőő

- 74 -
F-76
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

23 Financial assets/(liabilities) at fair value through profit or loss

2020 2019
HK$’000 HK$’000

Equity and debt securities

Non-current assets:
- listed in Hong Kong 253,349 -
- listed overseas 1,315,755 370,856
- unlisted in Hong Kong 170,019 186,924
- unlisted overseas 12,604,715 11,311,546
ņņņņņņņņņ ņņņņņņņņņ
14,343,838 11,869,326
--------------- ---------------
Current assets:
- listed in Hong Kong 2,560,818 2,625,273
- listed overseas 4,554,081 7,309,774
- unlisted overseas 7,253 6,865
ņņņņņņņņņ ņņņņņņņņņ
7,122,152 9,941,912
--------------- ---------------

21,465,990 21,811,238
őőőőőőőőő őőőőőőőőő

Derivative financial instruments

Current assets:
- swap 383,669 107,203
- option 489 -
- warrant 23,764 -
- forward 41,715 9,829
- future - 4,776
ņņņņņņņņņ ņņņņņņņņņ
449,637 121,808
őőőőőőőőő őőőőőőőőő

Current liabilities:
- swap (491,337) (147,529)
- option (299,288) (52,444)
- forward (28,760) (2,780)
ņņņņņņņņņ ņņņņņņņņņ
(819,385) (202,753)
őőőőőőőőő őőőőőőőőő

Representing:
- non-current assets 14,343,838 11,869,326
- current assets 7,571,789 10,063,720
- current liabilities (819,385) (202,753)
ņņņņņņņņņ ņņņņņņņņņ
Total 21,096,242 21,730,293
őőőőőőőőő őőőőőőőőő

- 75 -
F-77
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

23 Financial assets/(liabilities) at fair value through profit or loss (Continued)

The financial assets/(liabilities) at fair value through profit or loss are denominated in the following
currencies:

2020 2019
HK$’000 HK$’000

HK dollar 2,611,294 2,775,806

US dollar 17,525,597 17,501,556
Singapore dollar 247,008 222,500
Japanese Yen 116,320 373,571
GBP 41,846 70,666
Euro 271,880 645,679
RMB 186,487 -
Others 95,810 140,515
ņņņņņņņņņ ņņņņņņņņņ
21,096,242 21,730,293
őőőőőőőőő őőőőőőőőő

24 Cash and bank balances

2020 2019
HK$’000 HK$’000

Bank balances and cash 5,439,675 4,353,930

Short term bank deposits 10,206,348 13,316,741
ņņņņņņņņņ ņņņņņņņņņ
15,646,023 17,670,671
őőőőőőőőő őőőőőőőőő

Representing:
- unpledged 15,646,023 17,670,648
- restricted - 23
ņņņņņņņņņ ņņņņņņņņņ
15,646,023 17,670,671
őőőőőőőőő őőőőőőőőő

The effective interest rate on the bank deposits is 2.63% (2019: 2.51%) per annum. These deposits
have an average maturity of 60 days (2019: 133 days).

Cash and bank balances are denominated in the following currencies:

2020 2019
HK$’000 HK$’000

HK dollar 4,305,726 7,368,152

US dollar 8,570,009 8,807,976
RMB 1,363,338 1,087,991
Euro 270,961 146,543
GBP 157,534 192,624
Singapore dollar 849,687 14,404
Others 128,768 52,981
ņņņņņņņņņ ņņņņņņņņņ
15,646,023 17,670,671
őőőőőőőőő őőőőőőőőő
- 76 -
F-78
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

24 Cash and bank balances (Continued)

The conversion of RMB denominated balances into foreign currencies and the remittances of such
foreign currencies denominated bank balances and cash out of the PRC are subject to relevant rules
and regulations of foreign exchange control promulgated by the PRC government.

Cash and cash equivalents include the following for purpose of the consolidated statement of cash
flows.

2020 2019
HK$’000 HK$’000

Bank balances and cash 5,439,675 4,353,930

Short-term bank deposits 10,206,348 13,316,741
ņņņņņņņņņ ņņņņņņņņņ
15,646,023 17,670,671
Less: bank deposits with original maturities of more than
three months (1,070,981) (3,738,699)
Less: restricted cash - (23)
ņņņņņņņņņ ņņņņņņņņņ
14,575,042 13,931,949
őőőőőőőőő őőőőőőőőő

25 Assets classified as held-for-sale

As at As at
31st March 31st March
2020 2019
HK$’000 HK$’000

Investment properties classified as held-for-sale 324,370 348,280

őőőőőőőőő őőőőőőőőő

On 28th December 2018, the Group entered into a sale and purchase agreement with an
independent third party to disposal of its entire interests in a bare land with undetermined used in
Malaysia at a consideration of Ringgit Malaysian (“RM”) 181 million (equivalent to HK$324 million
(2019: HK$348 million)). As a result, relevant investment properties of HK$324 million (2019:
HK$348 million) are classified as held-for-sale in the consolidated financial statements. Approval
of the disposal has been obtained from the government of Malaysia during the year ended 31st
March 2020 and the disposal is expected to be completed during the year ending 31st March 2021.
As at 31st March 2020, RM24 million (equivalent to HK$42 million (2019: HK$45 million)) was
received as deposit.

- 77 -
F-79
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

26 Share capital and perpetual capital securities

Share capital

Number of
shares Amount
(Thousands) HK$’000

Authorised:
Ordinary shares of 1 Hong Kong dollar each
At 1st April 2018, 31st March 2019 and 31st March 2020 1,000,000,000 1,000,000,000
őőőőőőőőő őőőőőőőőő

Issued and fully paid:

Ordinary shares of 1 Hong Kong dollar each
At 1st April 2018, 31st March 2019 and 31st March 2020 62,743,532 62,743,532
őőőőőőőőő őőőőőőőőő

Perpetual capital securities

As at As at
31st March 31st March
2020 2019
HK$’000 HK$’000

USD500 million issued in 2017 3,968,568 3,969,456

őőőőőőőőő őőőőőőőőő

On 29th May 2017, a wholly owned subsidiary of the Group (the “Issuer”) issued 5.5% perpetual
capital securities with an aggregate principal of USD500 million for cash. The perpetual capital
securities are guaranteed by the Company.

These securities are perpetual and the coupon payment can be deferred at the discretion of the
Issuer and there is no limit as to the number of times of deferral of coupon payment. When the
Company and Issuer elect to declare dividends to their ordinary shareholders, the Issuer shall make
distribution to the holders of perpetual securities at the distribution rates as defined in the
subscription agreement.

- 78 -
F-80
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

27 Reserves

Investment Other
Exchange revaluation Retained Merger reserves
reserve reserve earnings reserve note (a) Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1st April 2019 (804,131) - 73,006,850 (33,100,357) (483,125) 38,619,237

Adjustment on adoption of IFRS 16
(note 2(a)(i)) - - 59,151 - - 59,151
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ

As at 1st April 2019, as restated (804,131) - 73,066,001 (33,100,357) (483,125) 38,678,388

Profit for the year - - 2,024,855 - - 2,024,855
Dividend paid to owners of the
Company (note 12) - - (909,781) - - (909,781)
Acquisition of non-controlling
interest (note 32 (c)) - - - - (8,247) (8,247)
Partial disposal of interest in a
subsidiary (note 32 (b)(iii)) - - - - 4,827 4,827
Release of exchange reserve upon
disposal of interests in subsidiaries (680) - - - - (680)
Release of merger reserve upon
liquidation of a subsidiary - - (27,999) 27,999 - -
Exchange translation differences
- Group (1,600,952) - - - - (1,600,952)
- Joint ventures and associates (50,921) - - - - (50,921)
Share of other reserve of an
associate - - - - (13) (13)
Transfer of statutory reserve of an
associate - - (5,594) - 5,594 -
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 31st March 2020 (2,456,684) - 74,147,482 (33,072,358) (480,964) 38,137,476
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

As at 1st April 2018 756,482 - 71,645,695 (37,757,621) (352,418) 34,292,138

Profit for the year - - 6,023,476 - - 6,023,476
Release of exchange reserve upon
disposal of interests in subsidiaries 11,490 - - - - 11,490
Release of hedging reserve upon
discontinuation of hedging
relationship - - - - (135,764) (135,764)
Exchange translation differences
- Group (1,402,193) - - - - (1,402,193)
- Joint ventures and associates (169,910) - - - - (169,910)
Transfer of statutory reserve of an
associate - - (5,057) - 5,057 -
Release of merger reserve upon
liquidation of a subsidiary - - (4,657,264) 4,657,264 - -
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 31st March 2019 (804,131) - 73,006,850 (33,100,357) (483,125) 38,619,237
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

Note (a): Other reserves mainly represent reserves arose from acquisition of additional interest in a subsidiary from non-controlling interests.

- 79 -
F-81
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

28 Deferred income tax

The movement on the net deferred income tax liabilities is as follows:

2020 2019
HK$’000 HK$’000

At 1st April (2,831,559) (2,969,554)

Disposal of interests in subsidiaries (3,389) 59,981
Charged to the consolidated income statement (note 11) (127,953) (110,598)
Exchange difference 184,211 188,612
ņņņņņņņņņ ņņņņņņņņņ
At 31st March (2,778,690) (2,831,559)
őőőőőőőőő őőőőőőőőő

The majority of deferred income tax assets and liabilities are to be recovered after more than 12
months. The gross movement in deferred income tax assets and liabilities (prior to offsetting of
balances within the same taxation jurisdiction) during the year is as follows:

Deferred income tax liabilities

Unrealised
gains on Accelerated Fair value
investment tax gains on
securities depreciation properties Others Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1st April 2019 (24,646) (142,068) (2,913,247) (54,750) (3,134,711)

Credited/(charged) to
consolidated income
statement (53,278) (24,869) (101,010) 9,162 (169,995)
Exchange difference 164 - 185,062 - 185,226
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 31st March 2020 (77,760) (166,937) (2,829,195) (45,588) (3,119,480)
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

At 1st April 2018 (133,195) (127,076) (2,884,001) (77,042) (3,221,314)

Disposal of subsidiaries - 59,981 - - 59,981
Credited/(charged) to
consolidated income
statement 108,536 (74,976) (221,556) 22,292 (165,704)
Exchange difference 13 3 192,310 - 192,326
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 31st March 2019 (24,646) (142,068) (2,913,247) (54,750) (3,134,711)
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

- 80 -
F-82
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

28 Deferred income tax (Continued)

Deferred income tax assets

Unrealised
intra-group
Tax losses Provisions profits Total
HK$’000 HK$’000 HK$’000 HK$’000

At 1st April 2019 101,157 5,795 196,200 303,152

Disposal of subsidiaries - (3,389) - (3,389)
Credited/(charged) to
consolidated income
statement 37,128 (2,406) 7,320 42,042
Exchange difference (1,015) - - (1,015)
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 31st March 2020 137,270 - 203,520 340,790
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

At 1st April 2018 89,918 3,741 158,101 251,760

Credited/(charged) to
consolidated income
statement 14,953 2,054 38,099 55,106
Exchange difference (3,714) - - (3,714)
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 31st March 2019 101,157 5,795 196,200 303,152
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set
off current tax assets against current tax liabilities and when the deferred income taxes relate to the
same fiscal authority. The following amounts, determined after appropriate offsetting, are shown
in the consolidated balance sheet:

2020 2019
HK$’000 HK$’000

Deferred income tax assets 269,159 234,517

Deferred income tax liabilities (3,047,849) (3,066,076)
őőőőőőőőő őőőőőőőőő

- 81 -
F-83
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

29 Bank and other borrowings

2020 2019
HK$’000 HK$’000

Bank borrowings (note (a))

Long-term bank borrowings
- secured 11,159,345 11,975,036
- unsecured 7,495,606 8,486,289
Less: current portion of long-term bank borrowings (2,459,967) (375,730)
ņņņņņņņņņņ ņņņņņņņņņņ
16,194,984 20,085,595
---------------- ----------------

Current portion of long-term bank borrowings

- secured 461,029 375,730
- unsecured 1,998,938 -
Short-term bank borrowings
- secured 935,613 -
ņņņņņņņņņņ ņņņņņņņņņņ
3,395,580 375,730
---------------- ----------------

19,590,564 20,461,325
---------------- ----------------

Guaranteed notes
Medium term notes (note (b))
- listed 10,812,568 10,929,483
- unlisted 1,805,815 1,804,662
ņņņņņņņņņņ ņņņņņņņņņņ
12,618,383 12,734,145
---------------- ----------------

Total bank and other borrowings 32,208,947 33,195,470

őőőőőőőőőő őőőőőőőőőő

Representing:
- non-current liabilities 28,813,367 32,819,740
- current liabilities 3,395,580 375,730
ņņņņņņņņņņ ņņņņņņņņņņ
Total 32,208,947 33,195,470
őőőőőőőőőő őőőőőőőőőő

As at and 31st March 2020 and 31st March 2019, the Group’s bank and other borrowings are
repayable as follows:

2020 2019
HK$’000 HK$’000

Within one year 3,395,580 375,730

Between one and two years 4,553,182 2,582,566
Between two and three years 12,380,780 4,475,046
Between three and four years 546,050 8,419,170
Between four and five years 2,444,008 6,228,997
Over five years 8,889,347 11,113,961
ņņņņņņņņņ ņņņņņņņņņ
32,208,947 33,195,470
őőőőőőőőő őőőőőőőőő

- 82 -
F-84
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

29 Bank and other borrowings (Continued)

Notes:

(a) These bank borrowings are secured by property, plant and equipment, investment
properties, right-of-use assets/land use rights, properties for sale and financial assets at fair
value through profit or loss.

The effective interest rate based on the prevailing market rates on the bank borrowings as
at 31st March 2020 is 2.86% (2019: 2.92%) per annum.

Bank borrowings are approximated their fair values and denominated in the following
currencies:

2020 2019
HK$’000 HK$’000

HK dollar 11,410,864 12,764,180

RMB 3,795,491 4,268,141
US dollar 935,613 101,685
GBP 3,039,066 3,327,319
Australian dollar 409,530 -
ņņņņņņņņņ ņņņņņņņņņ
19,590,564 20,461,325
őőőőőőőőő őőőőőőőőő

(b) Nan Fung Treasury Limited, a subsidiary of the Group has established a Medium Term
Note Programme (“MTN”). The aggregate principal amount increased from US$2 billion to
US$3 billion on 24th August 2018. As at 31st March 2020, the Group has drawdown of
totalling HK$12,744 million, of which US$1,410 million is listed on Singapore Exchange
Securities Trading Limited. The details of the drawdown are as follows:

Principal loan
drawdown Interest yield
Issue dates amounts Maturity date per annum Interests in arrear

29th August 2012 HK$800 million 29th August 2022 4.425% Quarterly
20th September 2012 US$300 million 20th September 2022 4.50% Semi-annually
10th October 2012 HK$300 million 10th October 2022 4.125% Quarterly
8th November 2012 HK$110 million 8th November 2022 3.95% Quarterly
30th January 2013 HK$100 million 30th January 2023 3.85% Quarterly
29th May 2014 US$200 million 29th May 2024 4.875% Semi-annually
13th September 2017 HK$500 million 13th September 2027 3.65% Quarterly
3rd October 2017 US$410 million 3rd October 2027 3.875% Semi-annually
5th September 2018 US$500 million 5th September 2028 5% Semi-annually

The MTN is guaranteed unconditionally and irrevocably by the Company. As at 31st March
2020, the fair values of the MTN are HK$13,490,868,000 (2019: HK$13,059,263,000). Of
which, HK$11,598,964,000 (2019: HK$11,229,561,000) is within level 1 of fair value
hierarchy and the remaining is within level 2 of fair value hierarchy which is estimated
using other comparable prices observed in the market. Total remaining capacity of the MTN
amounted to US$1,356,587,000 (2019: US$1,359,422,000).

(c) As at 31st March 2020, the Group had HK$30,880,632,000 (2019: HK$31,415,423,000)
undrawn banking facilities.

- 83 -
F-85
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 Trade and other payables, deposits and accruals

2020 2019
HK$’000 HK$’000

Trade and other payables and accruals (note (a)) 3,599,407 3,146,871
Accruals for construction work (note (a)) 221,974 242,713
Rental and other deposits received (note (a)) 557,754 518,025
Deferred income 22,508 108,164
Amounts due to joint ventures (note (b)) 4,542,509 4,026,223
Amounts due to associates (note (c)) 125,892 1,063,239
Amounts due to investee companies (note 20) 9,118 9,118
Amounts due to related companies and individuals
(note (d)) 493,048 594,553
Amount due to immediate holding company (note (e)) 8,002 8,024
Amount due to ultimate holding company (note (e)) 209,610 619,742
Amounts due to non-controlling interests (note (f)) 3,546,013 2,850,782
ņņņņņņņņņ ņņņņņņņņņ
13,335,835 13,187,454
őőőőőőőőő őőőőőőőőő

Notes:

(a) Trade and other payables mainly includes payables related to property development
projects including construction and development cost payables. Trade and other payables,
deposits and accruals are denominated in the following currencies:

2020 2019
HK$’000 HK$’000

HK dollar 3,695,309 3,137,679

RMB 319,709 488,580
US dollar 176,599 167,596
Others 187,405 113,754
ņņņņņņņņ ņņņņņņņņ
4,379,022 3,907,609
őőőőőőőő őőőőőőőő

(b) Amounts due to joint ventures are unsecured, interest free and repayable on demand. The
balances are denominated in the following currencies:

2020 2019
HK$’000 HK$’000

HK dollar 4,540,580 4,023,600

RMB 1,929 2,623
ņņņņņņņņņ ņņņņņņņņņ
4,542,509 4,026,223
őőőőőőőőő őőőőőőőőő

Details of the principal joint ventures as at 31st March 2020 are shown in note 38 to the
consolidated financial statements.

- 84 -
F-86
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30 Trade and other payables, deposits and accruals (Continued)

Notes: (Continued)

(c) Amounts due to associates are unsecured, interest free and repayable on demand. The
balances are denominated in the following currencies:

2020 2019
HK$’000 HK$’000

HK dollar 125,892 293,892

US dollar - 769,347
ņņņņņņņņņ ņņņņņņņņņ
125,892 1,063,239
őőőőőőőőő őőőőőőőőő

(d) As at 31st March 2020, amounts due to related companies and individuals of
HK$4,772,000 (2019: HK$4,725,000) bear interest at 1% per annum (2019: 1% per annum)
and remaining balances are interest free. The balances are unsecured and repayable on
demand. The balances are denominated in HK dollar.

(e) Amounts due to immediate holding company and ultimate holding company are unsecured,
interest free and repayable on demand. The balances are denominated in HK dollar.

(f) As at 31st March 2020, amounts due to non-controlling interests of HK$1,591,370,000

(2019: HK$1,956,754,000) bear interest rate ranged from 5.01% to 6.04% (2019: 5.01% to
6.04%). The remaining balances are interest free. The balances are unsecured and
repayable on demand.

The balances are denominated in the following currencies:

2020 2019
HK$’000 HK$’000

HK dollar 3,120,804 2,445,065

US dollar 10,312 10,440
RMB 226,360 230,955
GBP 188,537 164,322
ņņņņņņņņ ņņņņņņņņ
3,546,013 2,850,782
őőőőőőőő őőőőőőőő

- 85 -
F-87
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

31 Contract liabilities

2020 2019
HK$’000 HK$’000

Contract liabilities related to property sales (note a) 5,481,073 3,394,433

őőőőőőőőő őőőőőőőőő

Notes:

(a) The Group received payments from customers based on billing schedules as established in
contracts. Payments are usually received in advance before the transfer of properties.

(b) The following table shows the amount of revenue recognised in the current year that was
included in the contract liability balance at the beginning of the year:

2020 2019
HK$’000 HK$’000

Revenue recognised that was included in the

contract liabilities balance at the beginning of the
year
- Property sales 373,057 6,938,525
őőőőőőőőő őőőőőőőőő

(c) The following table shows the aggregate amount of transaction price allocated to unsatisfied
performance obligations resulting from fixed price contracts with an original expected
duration of revenue recognition in one year or more:

2020 2019
HK$’000 HK$’000

Expected to be recognised within one year 7,061,462 1,089,395

Expected to be recognised after one year - 5,807,822
ņņņņņņņņņ ņņņņņņņņņ
7,061,462 6,897,217
őőőőőőőőő őőőőőőőőő

For all other contracts with an original expected duration of one year or less or are billed
based on time incurred. As permitted under IFRS 15, the transaction price allocated to
these unsatisfied performance obligations is not disclosed.

- 86 -
F-88
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32 Notes to the consolidated statement of cash flows

(a) Reconciliation of profit before income tax to net cash generated from operations:

2020 2019
HK$’000 HK$’000

Profit before income tax 2,499,896 6,841,632

Depreciation and amortisation of
- property, plant and equipment 149,076 156,849
- right-of-use assets 41,928 -
- land use rights - 12,973
Net change in fair values of investment properties 417,441 (758,296)
Net gain on disposal of property, plant and equipment (397) (1,430)
Impairment and write-off of property, plant and equipment 4,291 6,612
Net gain on disposal of investment properties - (170,418)
Net loss/(gain) on disposal/liquidation of subsidiaries 28,843 (982,070)
Unrealised (gain)/loss on loans receivable at fair value
through profit or loss (56,594) 157,728
Unrealised loss on financial assets at fair value through
profit or loss and derivatives 476,308 451,362
Net provision for loss allowances of financial assets 529,980 203,554
Finance income, net (680,997) (166,541)
Unrealised exchange loss 137,919 -
Share of results of joint ventures (422,582) (1,516,629)
Share of results of associates 15,810 (513,050)
ņņņņņņņņņ ņņņņņņņņņ
Net cash from operating profit before working capital
changes 3,140,922 3,722,276

Decrease/(increase) in:
Properties for sale 149,989 8,307,754
Trade and other receivables, deposits and prepayments 514,260 (2,773,061)
Financial assets at fair value through profit or loss (663,690) 1,315,475

Increase/(decrease) in:
Trade and other payables, deposits and accruals 456,505 1,178,979
Contract liabilities 2,086,640 (3,900,666)
Financial liabilities at fair value through profit or loss 616,632 (67,293)
ņņņņņņņņņ ņņņņņņņņņ
Net cash generated from operations 6,301,258 7,783,464
őőőőőőőőő őőőőőőőőő

- 87 -
F-89
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32 Notes to the consolidated statement of cash flows (Continued)

(b) Net proceeds from disposal of subsidiaries

(i) Disposal of entire interests in Fast Trend Investments Limited (“Fast Trend”)

On 1st June 2018, the Group entered into a sale and purchase agreement with an
independent third party for sale of 100% of the issued share capital of Fast Trend. Fast
Trend held 100% interests in a subsidiary which held an investment property in Hong Kong,
at a total consideration of HK$7,394 million and provided a loan to the intermediate
holding company of the purchaser. The transaction was completed on 30th August 2018.
Details of the disposal are as follows:

HK$’000

Net assets disposed of:

Investment properties 6,510,000
Trade and other receivables 21,408
Cash and bank balances 42,748
Trade and other payables (107,458)
Tax payables (7,131)
Deferred income tax liabilities (59,981)
ņņņņņņņņņ
6,399,586
őőőőőőőőő

Net gain on disposal of interests in subsidiaries:

Total consideration 7,393,507
Net assets disposed of (6,399,586)
ņņņņņņņņņ
993,921
őőőőőőőőő

Net cash inflow on disposal of interests in subsidiaries:

Net consideration received during the period 5,518,507
Cash and bank balances disposed of (42,748)
ņņņņņņņņņ
5,475,759
őőőőőőőőő

- 88 -
F-90
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32 Notes to the consolidated statement of cash flows (Continued)

(b) Net proceeds from disposal of subsidiaries (Continued)

(ii) Disposal of entire interests in 257 Water Street LLC (“257 Water Street”)

On 16th October 2019, the Group entered into a sale and purchase agreement with an
independent third party for sale of 78.56% of the issued share capital of 257 Water Street.
257 Water Street held a residential property in New York, at a total consideration of
USD8 million. The transaction was completed on 16th October 2019. Details of the disposal
are as follows:

HK$’000

Net assets disposed of:

Properties for sale 181,103
Trade and other receivables 1,222
Cash and bank balances 2,270
Trade and other payables (3,017)
Bank borrowings (100,514)
ņņņņņņņņņ
81,064
Non-controlling interests (17,380)
ņņņņņņņņņ
78.56% of net assets disposed of 63,684
őőőőőőőőő

Net gain on disposal of interests in subsidiaries:

Total consideration 64,138
Net assets disposed of (63,684)
Release of exchange reserves (680)
ņņņņņņņņņ
(226)
őőőőőőőőő

Net cash inflow on disposal of interests in subsidiaries:

Consideration received during the year 64,138
Cash and bank balances disposed of (2,270)
ņņņņņņņņņ
61,868
őőőőőőőőő

(iii) Partial disposal of Nice Jolly Holdings Limited (“Nice Jolly”)

On 23rd December 2019, the Group entered into a sale and purchase agreement with an
independent third party (the “Purchaser”), for the (i) sale of 40% of the issued share capital
and (ii) assignment of shareholder’s loan of Nice Jolly at approximately HK$1,305 million.
Nice Jolly is an investment holding company which holds 100% interests in a subsidiary
which holds a property development project (the “Project”) in Shanghai. The transaction
was completed on 23rd December 2019. Subsequent to the completion, Nice Jolly remains
as a non-wholly owned subsidiary of the Group.

- 89 -
F-91
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32 Notes to the consolidated statement of cash flows (Continued)

(b) Net proceeds from disposal of subsidiaries (Continued)

(iii) Partial disposal of Nice Jolly Holdings Limited (“Nice Jolly”) (Continued)

The consideration is to be settled by two instalments. The first instalment of HK$359

million was received during the year ended 31st March 2020. The second instalment of
HK$946 million will due at the later of (i) 30th June 2023; and (ii) within five business
days after the Project completion notification date.

Details of the disposal of Nice Jolly are as follows:

HK$’000

Net liabilities of the subsidiaries:

Other non-current asset 2,787,370
Trade and other receivables 1,956
Cash and bank balance 112,540
Shareholder’s loan (2,871,992)
Other liabilities (43,597)
ņņņņņņņņ
(13,723)
őőőőőőőő

40% of net liabilities disposed of (5,489)

őőőőőőőő

Net gain on disposal of partial interests in subsidiaries:

Consideration received during the year 359,307
Present value of consideration receivable 802,101
ņņņņņņņņ
Present value of total consideration receivable 1,161,408
Assignment of shareholder’s loan (1,148,797)
Net liabilities disposed of 5,489
ņņņņņņņņ
18,100
Capital gain tax (13,273)
ņņņņņņņņ
4,827
őőőőőőőő

As at 31st March 2020, present value of the remaining consideration receivable for
transaction is approximately HK$813 million, which was included in loans and other
receivables (note 19) as non-current asset, after taking into account of HK$11 million
finance income recognised during the year.

- 90 -
F-92
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32 Notes to the consolidated statement of cash flows (Continued)

(c) Acquisition of non-controlling interests

During the year ended 31st March 2020, acquisition of non-controlling interests mainly represents
acquisition of remaining interests in Grace Shine Enterprises Limited (“Grace Shine”) with net cash
outflow of HK$285,044,000.

Grace Shine was a 85% owned subsidiary of the Group. It is an investment holding company which
holds 100% interests of a property development project in Hong Kong. On 31st May 2019, the Group
acquired the remaining 15% of issued shares of Grace Shine at a consideration of HK$285,044,000.
Grace Shine became a wholly owned subsidiary of the Group after the acquisition. As a result, the
Group recognised a decrease in non-controlling interests of HK$277,941,000. The difference
between the consideration and the decrease in non-controlling interest, amounted to
HK$7,103,000, is recognised in other reserves.

- 91 -
F-93
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32 Notes to the consolidated statement of cash flows (Continued)

(d) Reconciliation of liabilities arising from financing activities:

Amounts
due to Amounts Amount Amount Assets held
related due to due to due to Amounts to hedge
Bank and companies fellow immediate ultimate due to non bank and
other Interest and subsidiary holding holding controlling other Lease
borrowings Payables individuals companies company company interests borrowings liabilities Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1st April 2019 33,195,470 128,752 594,553 - 8,024 619,742 2,850,782 - - 37,397,323
Adoption of IFRS 16

F-94
(note 2(a)(i)) - - - - - - - - 120,395 120,395
Cash flows (170,844) (1,111,921) (101,505) - (22) (410,132) (515,323) - (16,012) (2,325,759)
Finance cost - 1,118,520 - - - - 86,768 - 4,374 1,209,662
Exchange differences (770,733) (10,538) - - - - (25,011) - (6,525) (812,807)
Other non-cash movement (44,946) - - - - - 1,148,797 - 42,786 1,146,637
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 31st March 2020 32,208,947 124,813 493,048 - 8,002 209,610 3,546,013 - 145,018 36,735,451
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

At 1st April 2018 35,440,292 55,975 649,281 248,789 - 539,266 2,905,441 (125,574) - 39,713,470
Cash flows (1,585,872) (1,162,528) (54,728) (248,789) 8,024 80,476 (53,523) - - (3,016,940)
Finance cost - 1,237,263 - - - - - - - 1,237,263
Exchange differences (612,938) (1,958) - - - - (1,136) - - (616,032)
Other non-cash movement (46,012) - - - - - - 125,574 - 79,562
ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ ņņņņņņņņņ
At 31st March 2019 33,195,470 128,752 594,553 - 8,024 619,742 2,850,782 - - 37,397,323
őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő őőőőőőőőő

- 92 -
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

33 Financial guarantees/contingent liabilities

As at 31st March 2019, the Group has undertaken to a bank amounting to HK$67,571,000 in respect
of the performance bonds issued for the contract works entered by its subsidiary and joint ventures.
During the year ended 31st March 2020, the Group was released from the financial guarantee
contract upon the completion of the contract works.

As at 31st March 2020, the Group provided financial guarantee to joint ventures for bank loans
related to overseas property development project. The amount of the Group’s share of guarantee is
HK$3,328,037,000 (2019: HK$nil), which is proportionate to the Group’s effective interest of
ownership in the joint venture.

34 Commitments

Other than those disclosed elsewhere in the financial statements, the Group has significant
commitments as follows:

(a) Capital commitments

2020 2019
HK$’000 HK$’000

Contracted but not provided for

Investment properties (note (i)) 5,611,676 3,722,883
Other investments (note (ii)) 3,754,783 5,949,095
ņņņņņņņņņņ ņņņņņņņņņņ
9,366,459 9,671,978
Capital contribution to
Joint ventures (note (iii)) 240,873 -
ņņņņņņņņņņ ņņņņņņņņņņ
9,607,332 9,671,978
őőőőőőőőőő őőőőőőőőőő

(i) As at 31st March 2020 and 31st March 2019, the Group had capital commitments for
investment properties under development and completed investment properties.

(ii) As at 31st March 2020 and 31st March 2019, the Group had uncalled capital commitments
to invest in the funds and direct investments. The commitments are subject to certain
conditions described in the contracts.

(iii) As at 31st March 2020, the Group has an outstanding commitment to contribute capital of
US$31,062,000 to joint ventures for jointly developing manufacturing and office properties
and parking lot located in New York.

- 93 -
F-95
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

34 Commitments (Continued)

(b) Commitments under operating leases

As at 31st March 2019, the Group had future aggregate minimum lease payments under non-
cancellable operating leases for land and buildings as follows:

2019
HK$’000

Third parties
- not later than one year 27,272
- later than one year and not later than five years 47,926
ņņņņņņņņ
75,198
őőőőőőőő

The lease terms range from 1 to 7 years for the year ended 31st March 2019.

From 1 April 2019, the Group recognised right-of-use assets for these leases, except for short-term
and low-value leases. Please refer to note 2(a)(i) for new standards, amendments to standards and
interpretation adopted by the Group. The aggregate lease payments under short-term leases and
low-value leases are as follows:

2020
HK$’000

Third parties
- not later than one year 5,433
- later than one year and not later than five years 2,197
ņņņņņņņņ
7,630
őőőőőőőő

35 Future operating lease receivables

As at 31st March 2020 and 31st March 2019, the Group had future aggregate minimum lease
receivables under non-cancellable operating leases in respect of the Group’s investment properties
and properties for sale as follows:

2020 2019
HK$’000 HK$’000

Within one year 1,416,941 1,290,725

Between one and two years 967,611 1,060,496
Between two and three years 625,439 653,645
Between three to four years 413,419 380,583
Between four to five years 332,396 268,113
Later than five years 1,744,717 1,732,552
ņņņņņņņņ ņņņņņņņņ
5,500,523 5,386,114
őőőőőőőő őőőőőőőő

- 94 -
F-96
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

36 Pledge of assets

As at 31st March 2020 and 31st March 2019, the Group had pledged certain assets to secure
borrowings of the Group. Their carrying values were as follows:

2020 2019
HK$’000 HK$’000

Property, plant and equipment 1,307,370 1,441,733

Investment properties 44,981,007 45,036,339
Right-of-use assets 334,050 -
Land use rights - 369,220
Properties for sale - 181,345
Financial assets at fair value through profit or loss 5,112,569 7,006,334
ņņņņņņņņņ ņņņņņņņņņ
51,734,996 54,034,971
őőőőőőőőő őőőőőőőőő

37 Significant related party transactions

Other than those disclosed elsewhere in the financial statements, significant related party
transactions which were carried out in the normal course of the Group’s business during the year
were as follows:

2020 2019
HK$’000 HK$’000

Income:
From associates
- management fee income (note (a)) 14,117 17,062
őőőőőőőőő őőőőőőőőő

From related companies which is held by a close family

member of directors of the Company
- rental income (note (b)) 22,780 -
őőőőőőőőő őőőőőőőőő

Notes:

(a) Management fee income from associates for administrative and management services
provided. The terms were determined by and agreed between both parties.

(b) Rental income from related companies for premises rented to related companies. The terms
were determined by and agreed between both parties.

- 95 -
F-97
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

38 Particulars of principal subsidiaries, joint ventures and associates

(a) Subsidiaries

The Group had interests in the following principal subsidiaries:

Percentage of
effective interest in
Place of Issued share capital/ ownership/voting
Name incorporation Principal activities registered capital power/profit sharing
2020 2019

Blooming Lotus Holdings British Virgin Property investment US$1,000 100% -

Limited Islands

Bordon Construction Company Hong Kong Investment holding and HK$686,700,000 100% 100%
Limited building construction

Bright Region Enterprise Hong Kong Property investment and HK$2 100% 100%
Limited property trading

Capital Treasure Investments British Virgin Property investment US$1,000 80% 80%
Limited 1 Islands

Century Wealth Development Hong Kong Property trading, money- HK$2 100% 100%
Limited lending and financing

Cheerwide Investment Limited 1 Hong Kong Property investment and HK$1 85% 85%
property trading

Chun Yip Construction Hong Kong Investment holding and HK$570,000,200 ordinary 100% 100%
Company Limited building construction and HK$1,000,000 non-
voting deferred

City Century Development Hong Kong Property development HK$1 100% 100%
Limited 2

Cloud Fort Development Hong Kong Property investment and HK$20 100% 100%
Company Limited trading

Continental Discovery Sdn. Malaysia Property investment RM100,000 100% 100%

Bhd.

Crown Time Properties Limited Hong Kong Property trading HK$2 100% 100%

Enormous Asset Limited 1 Hong Kong Property trading HK$1 75% 75%

Ever Crown Development Hong Kong Property investment HK$2 100% 100%
Limited

Ever Grand Enterprises Limited Hong Kong Property investment HK$1 100% 100%

First Harvest Development Hong Kong Property trading HK$1 100% 85%
Limited 1

- 96 -
F-98
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

38 Particulars of principal subsidiaries, joint ventures and associates (Continued)

(a) Subsidiaries (Continued)

The Group had interests in the following principal subsidiaries: (Continued)

Percentage of
effective interest in
Place of Issued share capital/ ownership/voting
Name incorporation Principal activities registered capital power/profit sharing
2020 2019

Forterra Trust Singapore Investment holding SG$1,078,617,757 100% 100%

Gavast Estates Limited Hong Kong Investment holding HK$2 100% 100%

Goldstead Properties Limited Hong Kong Property investment HK$1,000 100% 100%

Goodyear Investments Singapore Property investment SG$250,000 100% 100%

Private Limited

Great Team Development Hong Kong Property development HK$1 60% 60%
Limited 1,2

Greatco Finance Limited Hong Kong Financing HK$1 100% 100%

Group Reliance Limited Hong Kong Financing HK$250,000,000 100% 100%

Hing Fung Sendirian Berhad Malaysia Property investment RM3,200,000 100% 100%

Hon Hing Enterprises Hong Kong Building management HK$10,000 100% 100%
Limited

Jubilant Century Limited Hong Kong Property investment HK$10,000 100% 100%

Jubilee Charm Investments British Virgin Property investment US$1,000 100% 100%
Limited Islands

Landsun International Hong Kong Hotel operation, money HK$2 100% 100%
Limited lending and financing

Lok Choy Limited Hong Kong Property investment HK$100 100% 100%

London George Unit Trust Jersey Property investment GBP52,600,000 100% 100%

Longbrook Development Hong Kong Property investment HK$10,000 100% 100%

Limited

Main Shine Development Hong Kong Building management HK$500,000 100% 100%
Limited

Marvel and Company, Hong Kong Investment holding, HK$500,000 100% 100%
Limited property investment
and property trading

- 97 -
F-99
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

38 Particulars of principal subsidiaries, joint ventures and associates (Continued)

(a) Subsidiaries (Continued)

The Group had interests in the following principal subsidiaries: (Continued)

Percentage of
effective interest in
Place of Issued share capital/ ownership/voting
Name incorporation Principal activities registered capital power/profit sharing
2020 2019

Nan Fung Development Limited Hong Kong Financing, investment HK$900,000,002 ordinary 100% 100%
holding and property and HK$100,000,000
investment non-voting deferred

Nan Fung Finance Limited Hong Kong Money lending and HK$1,000,000 100% 100%
financing

Nan Fung (Holdings) Limited Hong Kong Investment holding, HK$6,000,000 100% 100%
property investment
and trading

Nan Fung Group Holdings British Virgin Investment holding US$5,545,836,729 100% 100%
Limited Islands

Nan Fung International Finance Hong Kong Financing HK$1 100% 100%
Limited

Nan Fung Property Hong Kong Investment holding HK$1,260,138,835 ordinary 100% 100%
Consolidated Limited and HK$138,834,776 non-
voting deferred

Nan Fung Property Holdings Hong Kong Investment holding HK$2,007,800 100% 100%
Limited

Nan Fung Real Estate Agency Hong Kong Provision of real estate HK$100,000 100% 100%
Limited agency service

Nan Fung Textiles Limited Hong Kong Investment holding, HK$10,000,000 100% 100%
property investment
and trading

Nan Fung Textiles Second Mill Hong Kong Property investment and HK$3,500,000 100% 100%
Limited trading

Nan Fung Treasury Limited British Virgin Financing US$1,000 100% 100%
Islands

Nan Fung Treasury (II) Limited British Virgin Financing US$1,000 100% 100%
Islands

Nan Fung Trinity (HK) Limited Hong Kong Investment holding HK$1 100% -

Nan Wai Development Limited Hong Kong Property investment HK$1 100% 100%

- 98 -
F-100
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

38 Particulars of principal subsidiaries, joint ventures and associates (Continued)

(a) Subsidiaries (Continued)

The Group had interests in the following principal subsidiaries: (Continued)

Percentage of
effective interest in
Place of Issued share capital/ ownership/voting
Name incorporation Principal activities registered capital power/profit sharing
2020 2019

New Charm Management Hong Kong Building management HK$10,000 100% 100%
Limited

New Connect Investments British Virgin Property investment US$1,000 100% 100%
Limited Islands

New Excellent Development Hong Kong Property investment HK$1 100% 100%
Limited

NF The Mills UK Ltd United Kingdom Gallery and event space GBP1 100% -

NFLSRE 1 Winthrop LLC Delaware Property investment US$28,257,300 100% -

NFLSRE 51 Sleeper LLC Delaware Property investment US$40,950,000 100% -

Northern Green Ventures Sdn. Malaysia Property investment RM100 ordinary and 100% 100%
Bhd. RM53,095,420
redeemable preference

Poh Foong Sdn. Bhd. Malaysia Property investment RM200,000 100% 100%

Portslade Global Limited British Virgin Investment holding US$1,000 100% 100%
Islands

Rich Union Development Hong Kong Property development HK$1 100% 100%
Limited

The Mills Limited Hong Kong Event space and business HK$1 100% 100%
planning

Timse Enterprises Limited Hong Kong Property trading HK$1 100% 100%

Unishine Development Limited Hong Kong Property trading HK$2 100% 100%

Vineberg Property Management Hong Kong Building management HK$100,000 100% 100%
Limited

Yip Fung Sendirian Berhad Malaysia Property investment RM6,900,000 100% 100%

к⎧㨟ཙᡯൠ⭒Ⲭኅᴹ䲀‫ޜ‬ਨ PRC Property investment RMB1,772,890,815 100% 100%

к⎧Ჟؑᡯൠ⭒䮻Ⲭᴹ䲀‫ޜ‬ਨ PRC Property investment RMB108,880,055 100% 100%

- 99 -
F-101
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

38 Particulars of principal subsidiaries, joint ventures and associates (Continued)

(a) Subsidiaries (Continued)

The Group had interests in the following principal subsidiaries: (Continued)

Percentage of
effective interest in
Place of Issued share capital/ ownership/voting
Name incorporation Principal activities registered capital power/profit sharing
2020 2019

к⎧ሦ⿮㖞ᾝᴹ䲀‫ޜ‬ਨ PRC Property investment US$117,000,000 100% 100%

к⎧㤡ᰝ㖞ᾝᴹ䲀‫ޜ‬ਨ PRC Financing RMB334,000,000 100% 100%

к⎧ጷ䊀ᡯൠ⭒Ⲭኅᴹ䲀‫ޜ‬ਨ PRC Property development RMB2,531,793,280 60% -

བྷ⚓㇑⨶䄞䂒(␡ൣ)ᴹ䲀‫ޜ‬ਨ PRC Asset management RMB15,000,000 100% 100%

(formerly named as ѝই㚟ਸ䋷
⭒㇑⨶૘䂒(␡ൣ)ᴹ䲀‫ޜ‬ਨ)

ཙ⍕Ცॷ、ᢰⲬኅᴹ䲀‫ޜ‬ਨ PRC Investment holding RMB11,000,000 100% 100%

ই䊀Ӝ㨟ᣅ䋷䄞䂒(ेӜ)ᴹ䲀‫ޜ‬ PRC Consultancy service USD1,000,000 100% 100%

ਨ

ᔓᐎᐲኅय़ᡯൠ⭒䮻Ⲭᴹ䲀 PRC Property investment HK$1,369,000,000 100% 100%

‫ޜ‬ਨ

ᔓᐎᐲኅ䊀ᡯൠ⭒䮻Ⲭᴹ䲀 PRC Property investment HK$2,345,000,000 100% 100%

‫ޜ‬ਨ

1 Management regards there are no material non-controlling interests to the Group.

2 The companies have entered into joint operations with an independent third party on
property development projects in Hong Kong. They will share any jointly held or incurred
assets, liabilities, revenue and expenses up to its interests in accordance with the
development agreements.

(b) Joint ventures

The Group had indirect interests in the following principal joint ventures:

Percentage of
effective interest in
Place of Issued share capital/ ownership/voting
Name incorporation Principal activities registered capital power/profit sharing
2020 2019

Ace Glory Limited Hong Kong Property development, HK$1 30% 30%
investment and trading

Best Profit Limited Hong Kong Property development, HK$1 25% 25%
investment and trading

- 100 -
F-102
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

38 Particulars of principal subsidiaries, joint ventures and associates (Continued)

(b) Joint ventures (Continued)

The Group had indirect interests in the following principal joint ventures: (Continued)

Percentage of
effective interest in
Place of Issued share capital/ ownership/voting
Name incorporation Principal activities registered capital power/profit sharing
2020 2019

Brave Sky Investments Limited Hong Kong Property development HK$2 50% 50%
and trading

Brave Sky Mortgage Limited Hong Kong Money lending HK$2 50% 50%

Century Rise Limited Hong Kong Property development, HK$1 30% 30%
investment and trading

Everbeam Investments Hong Kong Property trading HK$1 50% 50%

Limited

Everbeam Mortgage Limited Hong Kong Money lending HK$1 50% 50%

Fortune Creation British Virgin Property development US$100 50% -

developments Limited Islands

23-30 Borden JV LLC Delaware Property investment US$20,800,000 44% 44%

IPG LIC 49th Ave Lot 22 JV Delaware Property investment US$1,888,605 94% -
LLC1

IPG LIC 49th Ave Lower Delaware Property investment US$67,738,427 94% -
Floor Units JV LLC1

IPG LIC 49th Ave Upper Delaware Property investment US$24,272,969 94% -
Floor Unit JV LLC1

Market Prospect Limited Hong Kong Property development HK$2 50% 50%
and trading

Pacific Bond Limited Hong Kong Property development, HK$1 30% 30%
investment and
trading

Teamer International Limited Hong Kong Property development HK$1 25% 25%
and trading

Union King (Hong Kong) Hong Kong Property development HK$1 25% 25%
Limited and trading

ᚵት(ཙ⍕)ᴹ䲀‫ޜ‬ਨ PRC Property development RMB730,000,000 46.22% 46.22%

- 101 -
F-103
 NAN FUNG INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the British Virgin Islands with limited liability)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

38 Particulars of principal subsidiaries, joint ventures and associates (Continued)

(b) Joint ventures (Continued)

1 The directors of the Company considered the Group does not have unilateral control over
these joint ventures as the decisions about relevant activities require the unanimous
consent of the parties sharing of control.

(c) Associates

The Group had indirect interests in the following principal associates:

Percentage of
effective interest in
Place of Issued share capital/ ownership/voting
Name incorporation Principal activities registered capital power/profit sharing
2020 2019

Century Land Investment Hong Kong Property development HK$1 40% 40%
Limited

Empresa de Fomento Macau Property development MOP100,000,000 17% 17%

Industrial E Comercial and investment
Concórdia, S.A.1

ᶲ㴟ᶾ䓴屧㖻⓮❶㚱旸℔⎠ PRC Property investment US$100,000,000 49% 49%

1 The directors of the Company considered the Group has significant influence over this
company through its representative on the board of directors of this company.

- 102 -
F-104
 ISSUER

Nan Fung Treasury Limited

Commerce House
Wickhams Cay 1
P.O. Box 3140
Road Town, Tortola
British Virgin Islands VG1110

GUARANTOR

Nan Fung International Holdings Limited

Vistra Corporate Services Centre
Wickhams Cay II
Road Town, Tortola
British Virgin Islands VG1110

AUDITOR OF THE GUARANTOR

PricewaterhouseCoopers
Certified Public Accountants
22nd Floor
Prince’s Building
Central
Hong Kong

TRUSTEE

The Hongkong and Shanghai Banking Corporation Limited

Level 30, HSBC Main Building
1 Queen’s Road Central
Hong Kong

PRINCIPAL PAYING AGENT, REGISTRAR AND TRANSFER AGENT

The Hongkong and Shanghai Banking Corporation Limited

Level 30, HSBC Main Building
1 Queen’s Road Central
Hong Kong

LEGAL ADVISERS

To the Issuer and the To the Issuer and the To the Joint Lead Managers To the Trustee as to
Guarantor as to British Guarantor as to English law as to English law English law
Virgin Islands law

Conyers Dill & Pearman Linklaters Allen & Overy Allen & Overy
2901, 29th Floor, One 11/F, Alexandra House 9/F 50 Collyer Quay
Exchange Square Chater Road Three Exchange Square #09-01 OUE Bayfront
8 Connaught Place Central Central Singapore, 049321
Central Hong Kong Hong Kong
Hong Kong