CONNECTED TRANSACTIONS BUILDING IMPROVEMENTS AT BANK PROPERTIES

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1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. CONNECTED TRANSACTIONS BUILDING IMPROVEMENTS AT BANK PROPERTIES (Stock code: 11) THE CONTRACTS The Bank wishes to announce that on 9 February 2015 the Bank entered into the First Contract with Pat Davie as contractor, pursuant to which Pat Davie will complete and provide building interior demolition, improvement, installation and fit-out works and services in relation to the First Property for a maximum consideration (including optional works to be completed at the instruction of the Bank or its agent) of HK$15,260,550. The Bank also wishes to announce that on 8 May 2015 the Bank entered into the Second Contract with Pat Davie as contractor, pursuant to which Pat Davie will complete and provide building interior demolition, improvement, installation and fit-out works and services in relation to the Second Property for a maximum consideration (including optional works to be completed at the instruction of the Bank or its agent) of HK$56,313,030. LISTING RULES IMPLICATIONS Pat Davie is owned as to 92% by Shui On Contractors Limited, which in turn is a wholly-owned subsidiary of SOCAM Development Limited. Dr Vincent H S Lo is an executive director, the chairman, and together with his associates is entitled to control the exercise of more than 30% of the voting power at general meetings, of SOCAM Development Limited. Dr Lo is also a non-executive director of the Bank. As a result, Dr Lo is a connected person of the Bank. As Pat Davie is an associate of Dr Lo, Pat Davie is also a connected person of the Bank. Accordingly, the Contracts constitute connected transactions for the Bank under Chapter 14A of the Listing Rules. As the Contracts have been entered into within the same 12 month period, the Bank has aggregated and treated the Contracts as if they were one transaction in accordance with Chapter 14A of the Listing Rules. As all the applicable percentage ratios (other than the profits ratio which is not applicable) calculated with reference to the First Contract on a stand-alone basis, is less than 0.1%, the First Contract on a stand-alone basis was exempt from the reporting, announcement and 1

2 circular (including independent financial advice) and shareholders approval requirements under Chapter 14A of the Listing Rules. As the highest of the applicable percentage ratios (other than the profits ratio which is not applicable) calculated with reference to the Second Contract on a stand-alone basis, and with reference to the Contracts on an aggregated basis, is greater than 0.1% but less than 5%, the Contracts together are subject to the reporting and announcement requirements, but are exempt from the circular (including independent financial advice) and shareholders approval requirements, under Chapter 14A of the Listing Rules. THE CONTRACTS Date and Parties (a) The First Contract Date: 9 February 2015 Parties: (1) (as appointer) (2) Pat Davie Limited (as contractor) (b) The Second Contract Date: 8 May 2015 Parties: (1) (as appointer) (2) Pat Davie Limited (as contractor) Consideration (a) The First Contract The First Contract is for a consideration of HK$12,417,850 payable by the Bank to Pat Davie. In addition, if specified optional works are completed at the instruction of the Bank or its agent, additional consideration of up to HK$2,842,700 will be payable by the Bank to Pat Davie. Accordingly, under the First Contract, the maximum consideration payable by the Bank to Pat Davie is HK$15,260,550. The consideration will be paid based on the monthly site progress assessed by an external consultants team. 2

3 (b) The Second Contract The Second Contract is for a consideration of HK$47,622,570 payable by the Bank to Pat Davie. In addition, if specified optional works are completed at the instruction of the Bank or its agent, additional consideration of up to HK$8,690,460 will be payable by the Bank to Pat Davie. Accordingly, under the Second Contract, the maximum consideration payable by the Bank to Pat Davie is HK$56,313,030. The consideration will be paid based on the monthly site progress assessed by an external consultants team. The First Contract and the Second Contract were each entered into by the Bank following completion of separate tendering processes by the Bank. In each case, the tenders submitted by Pat Davie had the highest scores pursuant to tender assessment conducted by the external consultants team engaged by the Bank, taking into account prescribed factors such as pricing and technical aspects. Building Works Under the Contracts, Pat Davie will complete and provide specified building interior demolition, improvement, installation and fit-out works and services in relation to the First Property and the Second Property respectively. REASONS FOR AND BENEFITS OF ENTERING INTO THE CONTRACTS The Contracts will contribute to significant building improvements at the First Property and the Second Property, being two of the Bank s back office premises in Hong Kong. Such improvements will contribute to the Bank s strategy for long term development and for providing competitive, up-to-date and customer friendly banking services. The Directors (including the independent non-executive Directors) are of the view that the Contracts are made on normal commercial terms and in the ordinary and usual course of business of the Bank, and that the terms of the Contracts are fair and reasonable and in the interests of the Bank and its shareholders as a whole. GENERAL Pat Davie is principally engaged in high end interior decoration, fitting out, design and contracting in Hong Kong. Pat Davie has previously been engaged by the Bank (more than 12 months prior to the First Contract) to provide other fitting out and refurbishment works, and in each case the relevant works were completed to the satisfaction of the Bank. The Bank is principally engaged in commercial and retail banking business and offers a comprehensive range of financial products and services to its customers in Hong Kong, mainland China, Macau and Singapore. 3

4 LISTING RULES IMPLICATIONS Pat Davie is owned as to 92% by Shui On Contractors Limited, which in turn is a wholly-owned subsidiary of SOCAM Development Limited. Dr Vincent H S Lo is an executive director, the chairman, and together with his associates is entitled to control the exercise of more than 30% of the voting power at general meetings, of SOCAM Development Limited. Dr Lo is also a non-executive director of the Bank. As a result, Dr Lo is a connected person of the Bank. As Pat Davie is an associate of Dr Lo, Pat Davie is also a connected person of the Bank. Accordingly, the Contracts constitute connected transactions for the Bank under Chapter 14A of the Listing Rules. As the Contracts have been entered into within the same 12 month period, the Bank has aggregated and treated the Contracts as if they were one transaction in accordance with Chapter 14A of the Listing Rules. As all the applicable percentage ratios (other than the profits ratio which is not applicable) calculated with reference to the First Contract on a stand-alone basis, is less than 0.1%, the First Contract on a stand-alone basis was exempt from the reporting, announcement and circular (including independent financial advice) and shareholders approval requirements under Chapter 14A of the Listing Rules. As the highest of the applicable percentage ratios (other than the profits ratio which is not applicable) calculated with reference to the Second Contract on a stand-alone basis, and for the Contracts on an aggregated basis, is greater than 0.1% but less than 5%, the Contracts together are subject to the reporting and announcement requirements, but are exempt from the circular (including independent financial advice) and shareholders approval requirements, under Chapter 14A of the Listing Rules. Given Dr Lo s interest in Pat Davie as mentioned above, the Bank considers that he has a material interest in the Contracts. Accordingly, Dr Lo has abstained from voting on the relevant board resolutions of the Bank in relation to the Contracts. DEFINITIONS In this announcement, the following expressions have the meanings set out below unless the context requires otherwise: associate(s) Bank connected person Contracts Directors shall have the same meaning as provided in the Listing Rules shall have the same meaning as provided in the Listing Rules the First Contract and the Second Contract together the directors of the Bank 4

5 First Property First Contract Listing Rules Pat Davie Second Property Second Contract Stock Exchange Argyle Street, Mongkok, Kowloon, Hong Kong the contract entered into between the Bank and Pat Davie dated 9 February 2015 under which Pat Davie will complete and provide specified building interior demolition, improvement, installation and fit-out works and services in relation to the First Property the Rules Governing the Listing of Securities on the Stock Exchange Pat Davie Limited, a company incorporated in Hong Kong with limited liability 12/F Main Equipment Room, Hang Seng Tower, 33 Wai Yip Street, Kowloon Bay, Kowloon, Hong Kong the contract entered into between the Bank and Pat Davie dated 8 May 2015 under which Pat Davie will complete and provide specified building interior demolition, improvement, installation and fit-out works and services in relation to the Second Property The Stock Exchange of Hong Kong Limited As at the date hereof, the Board of Directors of the Bank comprises Dr Raymond K F Ch ien* (Chairman), Ms Rose W M Lee (Vice-Chairman and Chief Executive), Dr John C C Chan*, Mr Nixon L S Chan, Dr Henry K S Cheng*, Ms L Y Chiang*, Mr Andrew H C Fung, Dr Fred Zuliu Hu*, Ms Irene Y L Lee*, Ms Sarah C Legg #, Dr Eric K C Li*, Dr Vincent H S Lo #, Mr Kenneth S Y Ng #, Mr Richard Y S Tang*, Mr Peter T S Wong # and Mr Michael W K Wu*. # Non-executive Directors * Independent Non-executive Directors For and on behalf of C C Li Secretary Hong Kong, 8 May 2015 Incorporated in Hong Kong with limited liability Registered Office and Head Office: 83 Des Voeux Road Central, Hong Kong 5